10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended April 30, 2015

OR

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-32224

salesforce.com, inc.

(Exact name of registrant as specified in its charter)

Delaware	94-3320693
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

The Landmark @ One Market, Suite 300

San Francisco, California 94105

(Address of principal executive offices)

Telephone Number (415) 901-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x   No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x   No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x	Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)	Smaller reporting company   ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 30, 2015, there were approximately 656.0 million shares of the Registrant’s Common Stock outstanding.

INDEX

		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of April 30, 2015 and January 31, 2015	3
	Condensed Consolidated Statements of Operations for the three months ended April 30, 2015 and 2014	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended April 30, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	56
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	72

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

	April 30, 2015			January 31, 2015
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	941,956		$	908,117
Short-term marketable securities	77,059			87,312
Accounts receivable, net	926,381			1,905,506
Deferred commissions	208,101			225,386
Prepaid expenses and other current assets	310,983			280,554
Land and building improvements held for sale	140,345			143,197
Total current assets	2,604,825			3,550,072
Marketable securities, noncurrent	903,461			894,855
Property and equipment, net	1,737,094			1,125,866
Deferred commissions, noncurrent	153,018			162,796
Capitalized software, net	421,323			433,398
Goodwill	3,791,583			3,782,660
Other assets, net	754,378			628,320
Restricted cash	0			115,015
Total assets	$	10,365,682		$	10,692,982
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	928,105		$	1,103,335
Deferred revenue	3,032,771			3,286,768
Total current liabilities	3,960,876			4,390,103
Convertible 0.25% senior notes, net	1,076,727			1,070,692
Loan assumed on 50 Fremont	198,776			0
Revolving credit facility	0			300,000
Deferred revenue, noncurrent	24,049			34,681
Other noncurrent liabilities	870,051			922,323
Total liabilities	6,130,479			6,717,799
Stockholders’ equity:
Common stock	656			651
Additional paid-in capital	4,864,652			4,604,485
Accumulated other comprehensive loss	(28,352		)	(24,108		)
Accumulated deficit	(601,753		)	(605,845		)
Total stockholders’ equity	4,235,203			3,975,183
Total liabilities and stockholders’ equity	$	10,365,682		$	10,692,982

See accompanying Notes.

3

salesforce.com, inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended April 30,
	2015			2014
Revenues:
Subscription and support	$	1,405,287		$	1,147,306
Professional services and other	105,880			79,466
Total revenues	1,511,167			1,226,772
Cost of revenues (1)(2):
Subscription and support	274,241			208,947
Professional services and other	107,561			83,358
Total cost of revenues	381,802			292,305
Gross profit	1,129,365			934,467
Operating expenses (1)(2):
Research and development	222,128			188,358
Marketing and sales	736,938			639,355
General and administrative	175,811			162,095
Operating lease termination resulting from purchase of 50 Fremont, net	(36,617		)	0
Total operating expenses	1,098,260			989,808
Income (loss) from operations	31,105			(55,341		)
Investment income	4,561			1,778
Interest expense	(16,675		)	(20,359		)
Other expense (1)(3)	(918		)	(10,847		)
Income (loss) before provision for income taxes	18,073			(84,769		)
Provision for income taxes	(13,981		)	(12,142		)
Net income (loss)	$	4,092		$	(96,911	)
Basic net income (loss) per share	$	0.01		$	(0.16	)
Diluted net income (loss) per share	$	0.01		$	(0.16	)
Shares used in computing basic net income (loss) per share	653,809			612,512
Shares used in computing diluted net income (loss) per share	664,310			612,512

_______________

(1) Amounts include amortization of purchased intangibles from business combinations, as follows:

	Three Months Ended April 30,
	2015		2014
Cost of revenues	$	19,690	$	28,672
Marketing and sales	20,027		14,965
Other non-operating expense	815		0

(2) Amounts include stock-based expense, as follows:

	Three Months Ended April 30,
	2015		2014
Cost of revenues	$	15,381	$	11,810
Research and development	31,242		27,284
Marketing and sales	70,534		67,133
General and administrative	25,403		24,865

(3) Amount includes approximately $8.5 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the three months ended April 30, 2014.

See accompanying Notes.

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salesforce.com, inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2015			2014
Net income (loss)	$	4,092		$	(96,911	)
Other comprehensive loss, before tax and net of reclassification adjustments:
Foreign currency translation and other gains (losses)	(1,855		)	3,115
Unrealized losses on investments	(2,389		)	(5,497		)
Other comprehensive loss, before tax	(4,244		)	(2,382		)
Tax effect	0			0
Other comprehensive loss, net of tax	(4,244		)	(2,382		)
Comprehensive loss	$	(152	)	$	(99,293	)

See accompanying Notes.

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salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2015			2014
Operating activities:
Net income (loss)	$	4,092		$	(96,911	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	127,927			110,808
Amortization of debt discount and transaction costs	5,861			11,791
50 Fremont lease termination, net	(36,617		)	0
Loss on conversions of convertible senior notes	0			8,529
Amortization of deferred commissions	77,155			59,855
Expenses related to employee stock plans	142,560			131,092
Excess tax benefits from employee stock plans	(4,224		)	(9,041		)
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net	979,170			676,682
Deferred commissions	(50,092		)	(40,896		)
Prepaid expenses and other current assets and other assets	(11,274		)	4,277
Accounts payable, accrued expenses and other liabilities	(239,072		)	(185,599		)
Deferred revenue	(264,629		)	(197,500		)
Net cash provided by operating activities	730,857			473,087
Investing activities:
Business combination, net of cash acquired	(12,470		)	0
Purchase of 50 Fremont land and building	(425,376		)	0
Deposit for purchase of 50 Fremont land and building	115,015			0
Non-refundable amounts received for sale of land available for sale	2,852			30,000
Strategic investments	(144,462		)	(16,246		)
Purchases of marketable securities	(207,225		)	(250,536		)
Sales of marketable securities	192,184			79,312
Maturities of marketable securities	14,446			7,198
Capital expenditures	(71,087		)	(60,098		)
Net cash used in investing activities	(536,123		)	(210,370		)
Financing activities:
Proceeds from employee stock plans	155,015			73,795
Excess tax benefits from employee stock plans	4,224			9,041
Payments on convertible senior notes	0			(283,892		)
Principal payments on capital lease obligations	(16,825		)	(10,594		)
Payments on revolving credit facility and term loan	(300,000		)	(7,500		)
Net cash used in financing activities	(157,586		)	(219,150		)
Effect of exchange rate changes	(3,309		)	2,689
Net increase in cash and cash equivalents	33,839			46,256
Cash and cash equivalents, beginning of period	908,117			781,635
Cash and cash equivalents, end of period	$	941,956		$	827,891

See accompanying Notes.

6

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

Supplemental Cash Flow Disclosure

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2015		2014
Supplemental cash flow disclosure:
Cash paid during the period for:
Interest	$	4,252	$	8,667
Income taxes, net of tax refunds	$	10,581	$	9,994
Non-cash financing and investing activities:
Fixed assets acquired under capital leases	$	2,960	$	5,886
Building in progress - leased facility acquired under financing obligation	$	19,966	$	12,760
Fair value of loan assumed on 50 Fremont	$	198,751	$	0

See accompanying Notes.

7

salesforce.com, inc.

Notes to Condensed Consolidated Financial Statements

1. Summary of Business and Significant Accounting Policies

Description of Business

Salesforce.com, inc. (the “Company”) is a leading provider of enterprise cloud computing services. The Company is dedicated to helping customers of all sizes and industries worldwide transform themselves into “customer companies” by empowering them to connect with their customers, partners, employees and products in entirely new ways. The Company provides customers with the solutions they need to build a next generation social front office with social and mobile cloud technologies.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2016, for example, refer to the fiscal year ending January 31, 2016.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2015 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of cash flows for the three months ended April 30, 2015 and 2014, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2015 was derived from the audited consolidated financial statements that are included in the Company’s Form 10-K for the fiscal year ended January 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2015 Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K, and include all adjustments necessary for the fair presentation of the Company’s balance sheet as of April 30, 2015, and its results of operations, including its comprehensive loss, and its cash flows for the three months ended April 30, 2015 and 2014. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2015 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.

Significant estimates and assumptions made by management include the determination of:

• the best estimate of selling price of the deliverables included in multiple deliverable revenue arrangements,

• the fair value of assets acquired and liabilities assumed for business combinations,

• the recognition, measurement and valuation of current and deferred income taxes,

• the fair value of convertible notes,

• the fair value of stock awards issued and related forfeiture rates,

• the valuation of strategic investments and the determination of other-than-temporary impairments, and

• the assessment of determination of impairment of long-lived assets (property and equipment, goodwill and identified intangibles).

Actual results could differ materially from those estimates.

8

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segments

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is the chief executive officer, in deciding how to allocate resources and assessing performance. Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its offerings, presence and reach in various market segments of the enterprise cloud computing market. While the Company has offerings in multiple enterprise cloud computing market segments, the Company’s business operates in one operating segment because all of the Company's offerings operate on a single platform and are deployed in an identical way, andthe Company’s chief operating decision maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

Concentrations of Credit Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable. The Company maintains an allowance for doubtful accounts receivable balances. This allowance is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts.

No single customer accounted for more than five percent of accounts receivable at April 30, 2015 and January 31, 2015. No single customer accounted for five percent or more of total revenue during the three months ended April 30, 2015 and 2014.

Geographic Locations

As of April 30, 2015 and January 31, 2015, assets located outside the Americas were 13 percent and 12 percent of total assets, respectively.

Revenues by geographical region are as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Americas	$	1,115,120	$	876,377
Europe	258,805		230,810
Asia Pacific	137,242		119,585
	$	1,511,167	$	1,226,772

Americas revenue attributed to the United States was approximately 95 percent and 94 percent during the three months ended April 30, 2015 and 2014, respectively. No other country represented more than ten percent of total revenue during the three months ended April 30, 2015 and 2014.

Revenue Recognition

The Company derives its revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing the Company’s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees.

The Company commences 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;

9

• the collection of the fees is reasonably assured; and

• the amount of fees to be paid by the customer is fixed or determinable.

The Company’s 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 the Company’s 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 the Company’s 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 recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

The Company enters into arrangements with multiple deliverables that generally include multiple subscriptions, premium support and professional services. If the deliverables have standalone value upon delivery, the Company accounts for each deliverable separately. Subscription services have standalone value as such services are often sold separately. In determining whether professional services have standalone value, the Company considers the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription service start date and the contractual dependence of the subscription service on the customer’s satisfaction with the professional services work. To date, the Company has concluded that all of the professional services included in multiple deliverable arrangements executed have standalone value.

Multiple deliverables included in an arrangement are separated into different units of accounting and the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The Company determines the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (“VSOE”), if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. The amount of revenue allocated to delivered items is limited by contingent revenue, if any.

For certain professional services, the Company has established VSOE as a consistent number of standalone sales of these deliverables have been priced within a reasonably narrow range. The Company has not established VSOE for its subscription services due to lack of pricing consistency, the introduction of new services and other factors. Accordingly, the Company uses its BESP to determine the relative selling price for its subscription services.

The Company determines BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, its go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by the Company’s management, taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP.

Deferred Revenue

The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above and is recognized as the revenue recognition criteria are met. The Company generally invoices customers in annual installments. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business linearity within the quarter.

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Deferred revenue that will be recognized during the succeeding twelve month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent.

Deferred Commissions

Deferred commissions are the incremental costs that are directly associated with non-cancelable subscription contracts with customers and consist of sales commissions paid to the Company’s direct sales force.

The commissions are deferred and amortized over the non-cancelable terms of the related customer contracts, which are typically 12 to 36 months. The commission payments are paid in full the month after the customer’s service commences. The deferred commission amounts are recoverable through the future revenue streams under the non-cancelable customer contracts. The Company believes this is the preferable method of accounting as the commission charges are so closely related to the revenue from the non-cancelable customer contracts that they should be recorded as an asset and charged to expense over the same period that the subscription revenue is recognized. Amortization of deferred commissions is included in marketing and sales expense in the accompanying condensed consolidated statements of operations.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value.

Marketable Securities

Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the condensed consolidated statements of comprehensive loss. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, the Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value and its intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of investment income.

Fair Value Measurement

The Company measures its cash equivalents, marketable securities and foreign currency derivative contracts at fair value.

The additional disclosures regarding the Company’s fair value measurements are included in Note 2 “Investments”.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows:

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from their respective accounts and any loss on such retirement is reflected in operating expenses.

Capitalized Internal-Use Software Costs

The Company capitalizes costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

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Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable.

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Business Combinations

The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations.

Leases and Asset Retirement Obligations

The Company categorizes leases at their inception as either operating or capital leases. In certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis once control of the space is achieved, without regard to deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.

The Company establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period of the operating expense.

The Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

The Company additionally has entered into subleases for unoccupied leased office space. Losses are recognized in the period the sublease is executed. Any sublease payments received in excess of the straight-line rent payments for the sublease are recorded in other income (expense).

Accounting for Stock-Based Expense

The Company recognizes stock-based expenses related to stock options and restricted stock awards on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of four years. The Company recognizes stock-based expenses related to shares issued pursuant to its 2004 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period, which is 12 months. Stock-based expenses are recognized net of estimated forfeiture activity. The estimated forfeiture rate applied is based on historical forfeiture rates. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option pricing model.

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The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share:

	Three Months Ended   April 30,
Stock Options	2015			2014
Volatility	37.4		%	37.0		%
Estimated life	3.6 years			3.5 years
Risk-free interest rate	1.13-1.36		%	1.20-1.39		%
Weighted-average fair value per share of grants	$	19.52		$	16.93

There were no stock purchase rights granted under the ESPP in the three months ended April 30, 2015 or 2014 as these stock purchase rights are only granted in June and December.

The Company estimated its future stock price volatility considering both its observed option-implied volatilities and its historical volatility calculations. Management believes this is the best estimate of the expected volatility over the expected life of its stock options and stock purchase rights.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the condensed consolidated statement of operations in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.

The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, solely based on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision.

Foreign Currency Translation

The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the condensed consolidated statements of comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates.

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Warranties and Indemnification

The Company’s enterprise cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

New Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. This standard establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. In April 2015, the FASB proposed a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, ASU 2014-09 will be effective for fiscal 2019, including interim periods within that reporting period. The Company is currently in the process of assessing the adoption methodology, which allows the amendment to be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial application. The Company is also evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.

2. Investments

Marketable Securities

At April 30, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	582,682	$	1,887	$	(327	)	$	584,242
U.S. treasury securities	85,977		162		(12		)	86,127
Mortgage backed obligations	65,247		142		(554		)	64,835
Asset backed securities	170,983		142		(76		)	171,049
Municipal securities	36,418		98		(19		)	36,497
Foreign government obligations	524		17		0			541
U.S. agency obligations	15,832		12		(3		)	15,841
Covered bonds	20,893		495		0			21,388
Total marketable securities	$	978,556	$	2,955	$	(991	)	$	980,520

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At January 31, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	605,724	$	3,031	$	(481	)	$	608,274
U.S. treasury securities	73,226		257		(1		)	73,482
Mortgage backed obligations	44,181		159		(415		)	43,925
Asset backed securities	120,049		131		(43		)	120,137
Municipal securities	36,447		115		(25		)	36,537
Foreign government obligations	12,023		278		0			12,301
U.S. agency obligations	19,488		26		(4		)	19,510
Covered bonds	66,816		1,185		0			68,001
Total marketable securities	$	977,954	$	5,182	$	(969	)	$	982,167

The duration of the investments classified as marketable securities is as follows (in thousands):

	As of
	April 30, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	77,059	$	87,312
Long-term (due after one year)	903,461		894,855
	$	980,520	$	982,167

As of April 30, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	201,863	$	(312	)	$	5,853	$	(15	)	$	207,716	$	(327	)
U.S. treasury securities	27,419		(12		)	0		0			27,419		(12		)
Mortgage backed obligations	48,289		(460		)	7,081		(94		)	55,370		(554		)
Asset backed securities	85,730		(70		)	3,484		(6		)	89,214		(76		)
Municipal securities	13,151		(19		)	0		0			13,151		(19		)
U.S. agency obligations	2,172		(3		)	0		0			2,172		(3		)
	$	378,624	$	(876	)	$	16,418	$	(115	)	$	395,042	$	(991	)

The unrealized losses for each of the fixed rate marketable securities were less than $100,000. The Company does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of April 30, 2015. The Company expects to receive the full principal and interest on all of these marketable securities.

Fair Value Measurement

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1.    Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2.    Other inputs that are directly or indirectly observable in the marketplace.

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Level 3.    Unobservable inputs which are supported by little or no market activity.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of April 30, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of April 30, 2015
Cash equivalents (1):
Time deposits	$	0	$	57,849	$	0	$	57,849
Money market mutual funds	40,432		0		0		40,432
Marketable securities:
Corporate notes and obligations	0		584,242		0		584,242
U.S. treasury securities	0		86,127		0		86,127
Mortgage backed obligations	0		64,835		0		64,835
Asset backed securities	0		171,049		0		171,049
Municipal securities	0		36,497		0		36,497
Foreign government obligations	0		541		0		541
U.S. agency obligations	0		15,841		0		15,841
Covered bonds	0		21,388		0		21,388
Foreign currency derivative contracts (2)	0		9,465		0		9,465
Total Assets	$	40,432	$	1,047,834	$	0	$	1,088,266
Liabilities
Foreign currency derivative contracts (3)	$	0	$	2,581	$	0	$	2,581
Total Liabilities	$	0	$	2,581	$	0	$	2,581

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of April 30, 2015, in addition to $843.7 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of April 30, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the condensed consolidated balance sheet as of April 30, 2015.

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The following table presents information about the Company’s assets and liabilities that are measured at fair value as of January 31, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of January 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	292,487	$	0	$	292,487
Money market mutual funds	13,983		0		0		13,983
Marketable securities:
Corporate notes and obligations	0		608,274		0		608,274
U.S. treasury securities	0		73,482		0		73,482
Mortgage backed obligations	0		43,925		0		43,925
Asset backed securities	0		120,137		0		120,137
Municipal securities	0		36,537		0		36,537
Foreign government obligations	0		12,301		0		12,301
U.S. agency obligations	0		19,510		0		19,510
Covered bonds	0		68,001		0		68,001
Foreign currency derivative contracts (2)	0		10,611		0		10,611
Total Assets	$	13,983	$	1,285,265	$	0	$	1,299,248
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,694	$	0	$	5,694
Total Liabilities	$	0	$	5,694	$	0	$	5,694

______________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of January 31, 2015, in addition to $601.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

Derivative Financial Instruments

The Company enters into foreign currency derivative contracts with financial institutions to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in British pounds, Euros, Japanese yen, Canadian dollars and Australian dollars. The Company’s foreign currency derivative contracts, which are not designated as hedging instruments, are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. The Company’s derivative financial instruments program is not designated for trading or speculative purposes. As of April 30, 2015 and January 31, 2015, the foreign currency derivative contracts that were not settled were recorded at fair value on the condensed consolidated balance sheets.

Foreign currency derivative contracts are marked-to-market at the end of each reporting period with gains and losses recognized as other expense to offset the gains or losses resulting from the settlement or remeasurement of the underlying foreign currency denominated receivables and payables. While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

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Details on outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables are presented below (in thousands):

	As of
	April 30, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	731,148	$	942,086
Fair value of foreign currency derivative contracts	$	6,884	$	4,917

The fair value of the Company’s outstanding derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	April 30, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	9,465	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	2,581	$	5,694

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three months ended April 30, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Three Months Ended April 30,
	Location	2015		2014
Foreign currency derivative contracts	Other income (expense)	$	11,459	$	(12	)

Strategic Investments

As of April 30, 2015, the Company has four investments in marketable equity securities measured using quoted prices in their respective active markets and certain interests in non-marketable equity and debt securities that are collectively considered strategic investments. As of April 30, 2015, the fair value of the Company’s marketable equity securities of $17.7 million includes an unrealized gain of $12.9 million. As of January 31, 2015, the Company had four investments in marketable equity securities that had a fair value of $17.8 million, which included an unrealized gain of $13.1 million. These investments are recorded at fair value in other assets, net on the condensed consolidated balance sheets.

The Company’s interest in non-marketable equity and debt securities consists of noncontrolling equity and debt investments in privately-held companies. The Company’s investments in these privately-held companies are reported at cost or marked down to fair value when an event or circumstance indicates an other-than-temporary decline in value has occurred. These investments are valued using significant unobservable inputs or data in an inactive market and the valuation requires the Company’s judgment due to the absence of market prices and inherent lack of liquidity.

As of April 30, 2015 and January 31, 2015, the carrying value of the Company’s investments in privately-held companies was $301.0 million and $158.0 million, respectively. These investments are recorded in other assets, net on the condensed consolidated balance sheets. The estimated fair value of the Company's investments in privately-held companies was $452.0 million as of April 30, 2015. The estimated fair value of the Company's investments in privately-held companies was $280.0 million as of January 31, 2015.

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Investment Income

Investment income consists of interest income, realized gains, and realized losses on the Company’s cash, cash equivalents and marketable securities. The components of investment income are presented below (in thousands):

	Three Months Ended April 30,
	2015			2014
Interest income	$	3,049		$	1,764
Realized gains	2,128			117
Realized losses	(616		)	(103		)
Total investment income	$	4,561		$	1,778

Reclassification adjustments out of accumulated other comprehensive loss into net income (loss) were immaterial for the three months ended April 30, 2015 and 2014, respectively.

3. Property and Equipment

Property and Equipment

Property and equipment consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	572,164			125,289
Computers, equipment and software	1,203,411			1,171,762
Furniture and fixtures	75,726			71,881
Leasehold improvements	394,674			376,761
	2,429,863			$	1,745,693
Less accumulated depreciation and amortization	(692,769		)	(619,827		)
	$	1,737,094		$	1,125,866

Depreciation and amortization expense totaled $72.5 million and $56.4 million during the three months ended April 30, 2015 and 2014, respectively.

Computers, equipment and software at April 30, 2015 and January 31, 2015 included a total of $737.8 million and $734.7 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $233.3 million and $206.7 million, respectively, at April 30, 2015 and January 31, 2015. Amortization of assets under capital leases is included in depreciation and amortization expense.

In April 2014, the Company entered into an agreement to sell 8.8 net acres of undeveloped real estate in San Francisco, California, and a portion of associated perpetual parking rights, for which the Company received a nonrefundable deposit in the amount of $30.0 million. As of April 30, 2015, these 8.8 net acres and perpetual parking rights met the criteria to be classified as held for sale. As a result, the Company classified this portion of the Company's land and building improvements, which totaled $137.7 million, and the perpetual parking rights of $5.5 million, net of $2.9 million reimbursed for property taxes and other items, as land and building improvements held for sale in the current assets section of the accompanying condensed consolidated balance sheets. The sale of this portion of the Company's undeveloped real estate is expected to close within twelve months and is subject to certain closing conditions. As of April 30, 2015, the fair value of the Company's land, building improvements and perpetual parking rights, based on the expected sale proceeds, exceeds the carrying value.

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In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street (“350 Mission”) in San Francisco, California. The space rented is for the total office space available in the building, which is in the process of being constructed. As a result of the Company’s involvement during the construction period, the Company is considered for accounting purposes to be the owner of the construction project. As of April 30, 2015, the Company had capitalized $136.5 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding noncurrent financing obligation liability of $136.5 million. The financing obligation carrying value also includes $8.3 million of tenant improvement obligations offset by $0.4 million of imputed interest. The total expected financing obligation associated with this lease upon completion of the construction of the building, inclusive of the amounts currently recorded, is $335.8 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord in phases as the office space becomes ready for occupancy. In April 2015, the building was placed into service.

There was no impairment of long-lived assets during the three months ended April 30, 2015 and 2014, respectively.

4. Business Combinations

50 Fremont

In February 2015, the Company acquired 50 Fremont Street, a 41-story building totaling approximately 817,000 rentable square feet located in San Francisco, California (“50 Fremont”). At the time of the acquisition, the Company was leasing approximately 500,000 square feet of the available space in 50 Fremont. As of April 30, 2015, the Company occupied approximately 515,000 square feet. The Company acquired 50 Fremont for the purpose of expanding its global headquarters in San Francisco. Pursuant to the acquisition agreement, the Company also acquired existing third-party leases and other intangible property and terminated the Company’s existing office leases with the seller. In accordance with ASC 805, Business Combinations, the Company accounted for the building purchase as a business combination.

The purchase consideration for the corporate headquarters building was as follows (in thousands):

	Fair Value
Cash	$	435,189
Loan assumed on 50 Fremont	200,000
Prorations due to ownership transfer midmonth	2,411
Total purchase consideration	$	637,600

The following table summarizes the fair values of net tangible and intangible assets acquired (in thousands):

	Fair Value
Building	$	435,390
Land	183,888
Termination of salesforce operating lease	9,483
Acquired lease intangibles	7,590
Loan assumed on 50 Fremont fair market value adjustment	1,249
Total	$	637,600

To fund the purchase of 50 Fremont, the Company used $115.0 million of restricted cash that the Company had on the balance sheet as of January 31, 2015.

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In connection with the purchase, the Company recognized a net non-cash gain totaling approximately $36.6 million on the termination of the lease signed in January 2012. This amount reflects a gain of $46.1 million for the reversal of tenant incentives provided from the previous landlord at the inception of the lease and a loss of $9.5 million related to the termination of the Company's operating lease. The tax impact as a result of the difference between tax and book basis of the building is insignificant after considering the impact of the Company's valuation allowance. These amounts above have been included in the Company's condensed consolidated statements of operations and condensed consolidated balance sheets. The Company has included the rental income from third party leases with other tenants in the building, and the proportionate share of building expenses for those leases, in other expense in the Company's condensed consolidated results of operations from the date of acquisition. These amounts are recorded in other expense as this net rental income is not part of our core operations. These amounts were not material for the periods presented. The Company expects to finalize the depreciable life of the building as soon as practicable, but not later than one year from the acquisition date.

Other Business Combination

During the three months ended April 30, 2015, the Company acquired one company for an aggregate of $12.4 million in cash, net of cash acquired, and has included the financial results of this company in its condensed consolidated financial statements from the date of acquisition. The Company accounted for this transaction as a business combination. In allocating the purchase consideration based on estimated fair values, the Company recorded $8.9 million of goodwill. Some of this goodwill balance is not deductible for U.S. income tax purposes.

Goodwill

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter.

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combination	8,923
Balance as of April 30, 2015	$	3,791,583

5. Debt

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						April 30, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,076,727	$	1,070,692

___________ 

(1)This amount represents the equity component recorded at the initial issuance of the 0.25% convertible senior notes.

In March 2013, the Company issued at par value $1.15 billion of 0.25% convertible senior notes (the “0.25% Senior Notes”, or the “Notes”) due April 1, 2018, unless earlier purchased by the Company or converted. Interest is payable semi-annually, in arrears on April 1 and October 1 of each year.

The 0.25% Senior Notes are governed by an indenture between the Company, as issuer, and U.S. Bank National Association, as trustee. The 0.25% Senior Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by the Company.

If converted, holders of the 0.25% Senior Notes will receive cash equal to the principal amount, and at the Company’s election, cash, shares of the Company’s common stock, or a combination of cash and shares, for any amounts in excess of the principal amounts.

21

Certain terms of the conversion features of the 0.25% Senior Notes are as follows:

	Conversion Rate per $1,000 Par Value	Initial Conversion Price per Share		Convertible Date
0.25% Senior Notes	15.0512	$	66.44	January 1, 2018

Throughout the term of the 0.25% Senior Notes, the conversion rate may be adjusted upon the occurrence of certain events, including any cash dividends. Holders of the 0.25% Senior Notes will not receive any cash payment representing accrued and unpaid interest upon conversion of a Note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than canceled, extinguished or forfeited.

Holders may convert the 0.25% Senior Notes under the following circumstances:

• during any fiscal quarter, if, for at least 20 trading days during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sales price of the Company’s common stock for such trading day is greater than or equal to 130% of the applicable conversion price on such trading day;

• in certain situations, when the trading price of the 0.25% Senior Notes is less than 98% of the product of the sale price of the Company’s common stock and the conversion rate;

• upon the occurrence of specified corporate transactions described under the 0.25% Senior Notes indenture, such as a consolidation, merger or binding share exchange; or

• at any time on or after the convertible date noted above.

Holders of the 0.25% Senior Notes have the right to require the Company to purchase with cash all or a portion of the Notes upon the occurrence of a fundamental change, such as a change of control, at a purchase price equal to 100% of the principal amount of the 0.25% Senior Notes plus accrued and unpaid interest. Following certain corporate transactions that constitute a change of control, the Company will increase the conversion rate for a holder who elects to convert the 0.25% Senior Notes in connection with such change of control.

In accounting for the issuances of the 0.25% Senior Notes, the Company separated the 0.25% Senior Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 0.25% Senior Notes as a whole. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the 0.25% Senior Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the 0.25% Senior Notes issuance, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to expense over the terms of the 0.25% Senior Notes, and transaction costs attributable to the equity component were netted with the equity component in temporary stockholders’ equity and stockholders’ equity.

The 0.25% Senior Notes consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(73,273		)	(79,308		)
Net carrying amount	$	1,076,727		$	1,070,692

(1)The effective interest rate of the 0.25% Senior Notes is 2.53%. The interest rate is based on the interest rates of similar liabilities at the time of issuance that did not have an associated convertible feature.

22

(2)Included in the condensed consolidated balance sheets within Convertible 0.25% Senior Notes (which is classified as a noncurrent liability) and is amortized over the life of the 0.25% Senior Notes using the effective interest rate method.

The total estimated fair value of the Company’s 0.25% Senior Notes at April 30, 2015 was $1.4 billion. The fair value was determined based on the closing trading price per $100 of the 0.25% Senior Notes as of the last day of trading for the first quarter of fiscal 2016.

Based on the closing price of the Company’s common stock of $72.82 on April 30, 2015, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $110.4 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended April 30, 2015.

Note Hedges

To minimize the impact of potential economic dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock (the “0.25% Note Hedges”).

(in thousands, except for shares)	Date	Purchase		Shares
0.25% Note Hedges	March 2013	$	153,800	17,308,880

The 0.25% Note Hedges cover shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 0.25% Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The 0.25% Note Hedges will expire upon the maturity of the 0.25% Notes. The 0.25% Note Hedges are intended to reduce the potential economic dilution upon conversion of the 0.25% Notes in the event that the market value per share of the Company’s common stock, as measured under the 0.25% Notes, at the time of exercise is greater than the conversion price of the 0.25% Notes. The 0.25% Note Hedges are separate transactions and are not part of the terms of the 0.25% Notes. Holders of the 0.25% Notes will not have any rights with respect to the 0.25% Note Hedges. The 0.25% Note Hedges do not impact earnings per share.

Warrants

	Date	Proceeds (in thousands)		Shares	Strike Price
0.25% Warrants	March 2013	$	84,800	17,308,880	$	90.40

In March 2013, the Company also entered into a warrants transaction (the “0.25% Warrants”), whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock. The 0.25% Warrants were anti-dilutive for the periods presented. The 0.25% Warrants are separate transactions entered into by the Company and are not part of the terms of the 0.25% Notes or the 0.25% Note Hedges. Holders of the 0.25% Notes and 0.25% Note Hedges will not have any rights with respect to the 0.25% Warrants.

Revolving Credit Facility

In October 2014, the Company entered into an agreement (the “Credit Agreement”) with Wells Fargo, N.A. and certain other institutional lenders that provides for a $650.0 million unsecured revolving credit facility that matures in October 2019 (the “Credit Facility”). Immediately upon closing, the Company borrowed $300.0 million under the Credit Facility. The Borrowings under the Credit Facility bear interest, at the Company’s option at either a base rate, as defined in the Credit Agreement, plus a margin of 0.00% to 0.75% or LIBOR plus a margin of 1.00% to 1.75%. The Company is obligated to pay ongoing commitment fees at a rate between 0.125% and 0.25%. Such interest rate margins and commitment fees are based on the Company’s consolidated leverage ratio for the preceding four fiscal quarter periods. Interest and the commitment fees are payable in arrears quarterly. The Company may use amounts borrowed under the Credit Facility for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. Subject to certain conditions stated in the Credit Agreement, the Company may borrow amounts under the Credit Facility at any time during the term of the Credit Agreement. The Company may also prepay borrowings under the Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may be reborrowed.

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on the Company’s ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on the Company’s activities each defined specifically in the Credit Agreement. The Company was in compliance with the Credit Agreement’s covenants as of April 30, 2015.

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In March 2015, the Company paid down $300.0 million of outstanding borrowings under the Credit Facility. There are currently no outstanding borrowings held under the Credit Facility as of April 30, 2015.

The weighted average interest rate on borrowings under the Credit Facility was 1.6% for the period beginning in October 2014 and ended April 30, 2015.

Loan Assumed on 50 Fremont

The Company assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan requires interest only payments with the remaining principal due at maturity. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that the Company was in compliance with as of April 30, 2015.

Interest Expense on Convertible Senior Notes, Revolving Credit Facility and Loan Secured by 50 Fremont

The following table sets forth total interest expense recognized related to the Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2015		2014
Contractual interest expense	$	3,350	$	2,903
Amortization of debt issuance costs	1,018		1,228
Amortization of debt discount	6,059		10,984
	$	10,427	$	15,115

6. Other Balance Sheet Accounts

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, net	$	44,342	$	35,528
Prepaid income taxes	21,362		21,514
Customer contract asset	10,492		16,620
Other taxes receivable	25,592		27,540
Prepaid expenses and other current assets	209,195		179,352
	$	310,983	$	280,554

Customer contract asset reflects future billings of amounts that are contractually committed by ExactTarget’s existing customers as of the acquisition date in July 2013 that will be billed in the next 12 months. As the Company bills these customers this balance will reduce and accounts receivable will increase.

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Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $147,646 and $136,314, respectively	$	102,430	$	96,617
Acquired developed technology, net of accumulated amortization of $414,634 and $392,736, respectively	318,893		336,781
	$	421,323	$	433,398

Capitalized internal-use software amortization expense totaled $11.3 million and $8.3 million for the three months ended April 30, 2015 and 2014, respectively. Acquired developed technology amortization expense totaled $21.9 million and $30.4 million for the three months ended April 30, 2015 and 2014, respectively.

The Company capitalized $1.6 million and $1.0 million of stock-based expenses related to capitalized internal-use software development and deferred professional services during the three months ended April 30, 2015 and 2014, respectively.

Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	8,930	$	9,275
Long-term deposits	19,163		19,715
Purchased intangible assets, net of accumulated amortization of $150,963 and $130,968, respectively	317,565		329,971
Acquired intellectual property, net of accumulated amortization of $17,409 and $15,695, respectively	15,595		15,879
Strategic investments	318,716		175,774
Customer contract asset	407		1,447
Other	74,002		76,259
	$	754,378	$	628,320

Customer contract asset reflects future billings of amounts that were contractually committed by ExactTarget's existing customers as of the acquisition date in July 2013. As the Company bills these customers, this balance will decrease and accounts receivable will increase.

Purchased intangible assets amortization expense for the three months ended April 30, 2015 and 2014 was $20.0 million and $15.2 million, respectively. Acquired intellectual property amortization expense for the three months ended April 30, 2015 and 2014 was $1.7 million and $1.2 million, respectively.

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Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Accounts payable	$	60,227	$	95,537
Accrued compensation	308,589		457,102
Accrued other liabilities	380,227		321,032
Accrued income and other taxes payable	128,734		184,844
Accrued professional costs	27,814		16,889
Customer liability, current	10,561		13,084
Accrued rent	11,953		14,847
	$	928,105	$	1,103,335

Customer liability reflects the legal obligation to provide future services that are contractually committed to ExactTarget’s existing customers but unbilled as of the acquisition date in July 2013. As these services are invoiced, this balance will decrease and deferred revenue will increase.

Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	106,499	$	94,396
Customer liability, noncurrent	288		1,026
Financing obligation, building in progress-leased facility	145,255		125,289
Long-term lease liabilities and other	618,009		701,612
	$	870,051	$	922,323

7. Stockholders’ Equity

The Company maintains the following stock plans: the ESPP, the 2013 Equity Incentive Plan and the 2014 Inducement Equity Incentive Plan (the “2014 Inducement Plan”). The expiration of the 1999 Stock Option Plan (“1999 Plan”) in fiscal 2010 did not affect awards outstanding, which continue to be governed by the terms and conditions of the 1999 Plan. Offerings under the ESPP commenced in December 2011.

As of April 30, 2015, $70.5 million has been withheld on behalf of employees for future purchases under the ESPP and is recorded in accounts payable, accrued expenses and other liabilities.

Prior to February 1, 2006, options issued under the Company’s stock option plans generally had a term of 10 years. From February 1, 2006 through July 2013, options issued had a term of five years. After July 2013, options issued have a term of seven years.

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Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	908,405		0		0.00
2014 Inducement Equity Incentive Plan	109,666		0		0.00
Options granted under all plans	(597,589	)	597,589		66.98
Restricted stock activity	(653,021	)	0		0.00
Stock grants to board and advisory board members	(53,817	)	0		0.00
Exercised	0		(3,365,914	)	33.54
Plan shares expired	(858,610	)	0		0.00
Canceled	782,733		(782,733	)	43.38
Balance as of April 30, 2015	30,427,305		25,907,303		$	46.32	$	686,590,080
Vested or expected to vest			24,031,621		$	45.64	$	653,176,385
Exercisable as of January 31, 2015			9,224,356		$	35.38	$	345,386,983

The total intrinsic value of the options exercised during the three months ended April 30, 2015 and 2014 was $113.3 million and $68.8 million, respectively. The intrinsic value is the difference between the current market value of the stock and the exercise price of the stock option.

The weighted-average remaining contractual life of vested and expected to vest options is approximately 4.4 years.

As of April 30, 2015, options to purchase 9,224,356 shares were vested at a weighted average exercise price of $35.38 per share and had a remaining weighted-average contractual life of approximately 2.6 years. The total intrinsic value of these vested options as of April 30, 2015 was $345.4 million.

The following table summarizes information about stock options outstanding as of April 30, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $27.56	3,757,745	2.9	$	22.85	2,777,045	$	22.62
$27.66 to $37.95	4,583,438	1.7	36.02		3,377,985	35.78
$38.03 to $52.14	3,020,285	3.0	39.94		1,484,315	39.65
52.30	4,602,478	5.6	52.30		1,392,231	52.30
$53.60 to $57.79	1,881,361	6.1	55.21		163,751	55.93
$59.34	6,747,253	6.6	59.34		0	0.00
$59.37 to $67.71	1,314,743	6.6	63.46		29,029	63.26
	25,907,303	4.5	$	46.32	9,224,356	$	35.38

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Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	1,072,962		0.001
Canceled	(1,011,129	)	0.001
Vested and converted to shares	(1,828,661	)	0.001
Balance as of April 30, 2015	21,377,180		$	0.001	$	1,556,686
Expected to vest	18,423,081				$	1,341,569

The restricted stock, which upon vesting entitles the holder to one share of common stock for each share of restricted stock, has an exercise price of $0.001 per share, which is equal to the par value of the Company’s common stock, and generally vests over 4 years.

The weighted-average grant date fair value of the restricted stock issued for the three months ended April 30, 2015 and 2014 was $67.17 and $63.71, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at April 30, 2015:

Options outstanding	25,907,303
Restricted stock awards and units outstanding	21,377,180
Stock available for future grant:
2013 Equity Incentive Plan	29,751,044
2014 Inducement Equity Incentive Plan	676,261
2004 Employee Stock Purchase Plan	2,849,312
Convertible senior notes	17,308,880
Warrants	17,308,880
	115,178,860

8. Income Taxes

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year to date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the three months ended April 30, 2015, the Company reported a tax provision of $14.0 million on a pretax income of $18.1 million, which resulted in an effective tax rate of 77 percent. The tax provision recorded was primarily related to income taxes in profitable jurisdictions outside of the U.S.

For the three months ended April 30, 2014, the Company reported a tax expense of $12.1 million on a pretax loss of $84.8 million, which resulted in a negative effective tax rate of 14 percent. The tax provision recorded was related to income taxes in profitable jurisdictions outside the U.S. and the current tax expense in the U.S. The Company had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock. This U.S. current tax expense was partially offset by tax benefit attributable to losses in certain U.S. states with no valuation allowance.

Tax Benefits Related to Stock-Based Compensation

The total income tax benefit related to stock-based awards was $43.7 million and $42.6 million for three months ended April 30, 2015 and 2014, respectively, the majority of which was not recognized as a result of the valuation allowance.

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Unrecognized Tax Benefits and Other Considerations

The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. During the quarter ended April 30, 2015, the Company reached a settlement agreement upon completion of its tax examination in Japan which did not result in material impact to its income tax provision. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Germany, Switzerland and the United Kingdom. To date, the Company has not received any material proposed adjustments.

The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. In the next 12 months, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $19 million may occur.

9. Earnings/Loss Per Share

Basic earnings/loss per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the fiscal period. Diluted earnings/loss per share is computed by giving effect to all potential weighted average dilutive common stock, including options, restricted stock units, warrants and the convertible senior notes. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three months ended April 30, 2014 is the same as basic loss per share as there is a net loss in the period and inclusion of potentially issuable shares is anti-dilutive.

A reconciliation of the denominator used in the calculation of basic and diluted earnings/(loss) per share is as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Numerator:
Net income (loss)	$	4,092	$	(96,911	)
Denominator:
Weighted-average shares outstanding for basic loss per share	653,809		612,512
Effect of dilutive securities:
Convertible senior notes	0		0
Employee stock awards	10,501		0
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,310		612,512

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings/loss per share does not include the effect of the following potential outstanding common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted earnings/loss per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2015	2014
Stock awards	8,801	20,472
Convertible senior notes	17,309	30,662
Warrants	17,309	44,253

10. Commitments

Letters of Credit

As of April 30, 2015, the Company had a total of $67.9 million in letters of credit outstanding substantially in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through December 2030.

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Leases

The Company leases facilities space and certain fixed assets under non-cancelable operating and capital leases with various expiration dates.

As of April 30, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2016	$	86,398		$	227,050	$	1,777
Fiscal 2017	114,874			287,795		16,877
Fiscal 2018	119,086			244,615		21,107
Fiscal 2019	113,005			188,841		21,551
Fiscal 2020	201,507			181,765		21,995
Thereafter	0			1,052,718		252,517
Total minimum lease payments	634,870			$	2,182,784	$	335,824
Less: amount representing interest	(81,799		)
Present value of capital lease obligations	$	553,071

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment” and includes $145.3 million that was recorded to Financing obligation, building in progress-leased facility, which is included in Other noncurrent liabilities on the balance sheet.

The Company’s agreements for the facilities and certain services provide the Company with the option to renew. The Company’s future contractual obligations would change if the Company exercised these options.

The terms of the lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Of the total operating lease commitment balance of $2.2 billion, approximately $1.9 billion is related to facilities space. The remaining commitment amount is related to computer equipment, other leases, data center capacity and our development and test data center.

11. Legal Proceedings and Claims

In the ordinary course of business, the Company is or may be involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, class actions, wage and hour, and other claims. The Company has been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

During fiscal 2015, the Company received a communication from a large technology company alleging that the Company infringed certain of its patents.  The Company continues to analyze this claim.  No litigation has been filed to date.  There can be no assurance that this claim will not lead to litigation in the future.  The resolution of this claim is not expected to have a material adverse effect on the Company's financial condition, but it could be material to the net income or cash flows or both of a particular quarter. 

In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s operating results.

The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s condensed consolidated results of operations, cash flows or financial position.

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However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect the Company’s future results of operations or cash flows, or both, of a particular quarter.

12. Related-Party Transactions

In January 1999, the Salesforce.com Foundation, which recently became a private foundation, also referred to as the Foundation, was chartered to build philanthropic programs that are focused on youth and technology. Beginning in 2008, Salesforce.org, which is a non-profit mutual benefit corporation, was established to resell the Company’s services to nonprofit organizations and certain higher education organizations. The Company’s chairman is the chairman of both the Foundation and Salesforce.org. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of the Foundation’s nine board seats. The Company’s chairman and one of the Company’s employees hold two of Salesforce.org’s six board seats. The Company does not control the Foundation’s or Salesforce.org's activities, and accordingly, the Company does not consolidate either of the related entities' statement of activities with its financial results.

Since the Foundation’s inception, the Company has provided at no charge certain resources to Foundation employees such as office space. The value of these items was approximately $0.3 million for the three months ended April 30, 2015.

Additionally, the Company has donated subscriptions to the Company’s service to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain higher education entities. The Company does not charge Salesforce.org for these subscriptions, so revenue from subscriptions provided to non-profit organizations is provided to the Foundation to fund its charitable work. The value of the subscriptions pursuant to reseller agreements was approximately $14.1 million for the three months ended April 30, 2015. The Company plans to continue these programs.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion in“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements consist of, among other things, trend analyses, statements regarding future events, future financial performance, our anticipated growth, the effect of general economic and market conditions, the impact of foreign currency exchange rate and interest rate fluctuations on our results, our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms and to lead the industry shift to the “customer company,” our service performance and security, the expenses associated with new data centers, additional data center capacity, real estate and office facilities space, our operating results, new features and services, our strategy of acquiring or making investments in complementary businesses, joint ventures, services and technologies, and intellectual property rights, our ability to successfully integrate acquired businesses and technologies, our ability to continue the growth and to maintain deferred revenue and unbilled deferred revenue, our ability to protect our intellectual property rights, our ability to develop our brands, our ability to realize the benefits from strategic partnerships and investments, the effect of evolving government regulations, the valuation of deferred tax assets, the potential availability of additional tax assets in the future and related matters, the impact of expensing stock options, the sufficiency of our capital resources, factors related to our outstanding convertible notes, revolving credit facility, loan associated with 50 Fremont, compliance with our related debt covenants and capital lease obligations, and current and potential litigation involving us, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “aims,” “projects,” “intends,” “plans,” “believes,” “estimates,” “seeks,” “assumes,” “may,” “should,” “could,” “foresees,” “forecasts,” variations of such words and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Readers are directed to risks and uncertainties identified below, under “Risk Factors” and elsewhere in this report, for factors that may cause actual results to be different than those expressed in these forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

We are a leading provider of enterprise cloud computing solutions, with a focus on customer relationship management, or CRM. We introduced our first CRM solution in February 2000 and we have since expanded our offerings with new editions, solutions, enhanced features, platform capabilities and a new analytics solution through internal development and acquisitions. We sell to businesses of all sizes and in almost every industry worldwide on a subscription basis.

Our mission is to help our customers transform themselves into “customer companies” by empowering them to connect with their customers in entirely new ways. With our six core cloud service offerings—Sales Cloud, Service Cloud, Marketing Cloud, Communities Cloud, Analytics Cloud and the Salesforce1 Platform—customers have the tools they need to build a next generation customer success platform. Key elements of our strategy include:

• strengthening our market-leading solutions;

• extending distribution into new and high-growth categories;

• expanding strategic relationships with our existing customers;

• pursuing new customers;

• reducing customer attrition;

• building our business in top software markets globally, which includes building partnerships that help add customers; and

• encouraging the development of third-party applications on our cloud computing platforms.

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We believe the factors that will influence our ability to achieve our objectives include: our prospective customers’ willingness to migrate to enterprise cloud computing services; the availability, performance and security of our service; our ability to continue to release, and gain customer acceptance of, new and improved features; our ability to successfully integrate acquired businesses and technologies; successful customer adoption and utilization of our service; acceptance of our service in markets where we have few customers; the emergence of additional competitors in our market and improved product offerings by existing and new competitors; the location of new data centers; third-party developers’ willingness to develop applications on our platforms; our ability to attract new personnel and retain and motivate current personnel; and general economic conditions which could affect our customers’ ability and willingness to purchase our services, delay the customers’ purchasing decision or affect attrition rates.

To address these factors, we will need to, among other things, continue to add substantial numbers of paying subscriptions, upgrade our customers to fully featured versions or arrangements such as an Enterprise License Agreement, provide high quality technical support to our customers, encourage the development of third-party applications on our platforms and continue to focus on retaining customers at the time of renewal. Our plans to invest for future growth include the continuation of the expansion of our data center capacity, the hiring of additional personnel, particularly in direct sales, other customer-related areas and research and development, the expansion of domestic and international selling and marketing activities, specifically in our top markets, continuing to develop our brands, the addition of distribution channels, the upgrade of our service offerings, the development of new services such as the Analytics Cloud and Communities Cloud, the integration of acquired technologies, the expansion of our Marketing Cloud and Salesforce1 Platform core service offerings, and the additions to our global infrastructure to support our growth.

We also regularly evaluate acquisitions or investment opportunities in complementary businesses, joint ventures, services and technologies and intellectual property rights in an effort to expand our service offerings. We expect to continue to make such investments and acquisitions in the future and we plan to reinvest a significant portion of our incremental revenue in future periods to grow our business and continue our leadership role in the cloud computing industry. As a result of our aggressive growth plans, specifically our hiring plan and acquisition activities, we have incurred significant expenses from equity awards and amortization of purchased intangibles which have resulted in net losses on a U.S. generally accepted accounting principles ("GAAP") basis. As we continue with our growth plan and absent any one-time gains, we may continue to have net losses on a GAAP basis.

Our typical subscription contract term is 12 to 36 months, although terms range from one to 60 months, so during any fiscal reporting period only a subset of active subscription contracts is eligible for renewal. We calculate our attrition rate as of the end of each month. Our current attrition rate calculation does not include the Marketing Cloud service offerings. Our attrition rate was approximately nine percent as of April 30, 2015. We expect our attrition rate to remain consistent as we continue to expand our enterprise business and invest in customer success and related programs.

We expect marketing and sales costs, which were 49 percent of our total revenues for the three months ended April 30, 2015 and 52 percent for the same period a year ago, to continue to represent a substantial portion of total revenues in the future as we seek to grow our customer base, sell more products to existing customers, and build greater brand awareness.

In February 2015, we purchased a 41-story office building in San Francisco, California which we refer to as 50 Fremont. We currently occupy approximately 515,000 square feet of the 817,000 total rental square feet in the building. As part of the business combination accounting for the purchase, we recognized a one-time non-cash net gain of $36.6 million for the termination of the operating leases that existed prior to the purchase.

During the three months ended April 30, 2015, we also made several large strategic investments totaling approximately $145 million in privately-held companies, some of which are in the development stage. We plan to continue to make similar investments throughout the remainder of fiscal 2016.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2016, for example, refer to the fiscal year ending January 31, 2016.

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Operating Segments

We operate as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who in our case is the chief executive officer, in deciding how to allocate resources and assess performance. Over the past few years, we have completed several acquisitions. These acquisitions have allowed us to expand our offerings, presence and reach in various market segments of the enterprise cloud computing market. While we have offerings in multiple enterprise cloud computing market segments, our business operates in one operating segment because all of our offerings operate on a single platform and are deployed in an identical way, andour chief operating decision maker evaluates our financial information and resources and assesses the performance of these resources on a consolidated basis. Since we operate as one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

Sources of Revenues

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 paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees. Subscription and support revenues accounted for approximately 93 percent of our total revenues for the three months ended April 30, 2015. Subscription revenues are driven primarily by the number of paying subscribers, varying service types, the price of our service and renewals. We define a “customer” as a separate and distinct buying entity (e.g., a company, a distinct business unit of a large corporation, a partnership, etc.) that has entered into a contract to access our enterprise cloud computing services. We define a “subscription” as a unique user account purchased by a customer for use by its employees or other customer-authorized users, and we refer to each such user as a “subscriber.” The number of paying subscriptions at each of our customers ranges from one to hundreds of thousands. None of our customers accounted for more than five percent of our revenues during the three months ended April 30, 2015 and 2014 .

Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement dates of each contract. The typical subscription and support term is 12 to 36 months, although terms range from one to 60 months. Our subscription and support contracts are non-cancelable, though customers typically have the right to terminate their contracts for cause if we materially fail to perform. We generally invoice our customers in advance, in annual installments, and typical payment terms provide that our customers pay us within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue, or in revenue depending on whether the revenue recognition criteria have been met. In general, we collect our billings in advance of the subscription service period.

Professional services and other revenues consist of fees associated with consulting and implementation services and training. Our consulting and implementation engagements are typically billed on a time and materials basis. We also offer a number of training classes on implementing, using and administering our service that are billed on a per person, per class basis. Our typical professional services payment terms provide that our customers pay us within 30 days of invoice.

In determining whether professional services can be accounted for separately from subscription and support revenues, we consider a number of factors, which are described in “Critical Accounting Estimates—Revenue Recognition” below.

Revenue by Cloud Service Offering

We are providing the information below on a supplemental basis to give additional insight into the revenue performance of our individual core service offerings.

Subscription and support revenues during the three months ended April 30, 2015 and 2014 consisted of the following by core service offering (in millions):

	Three Months Ended   April 30, 2015		Three Months Ended   April 30, 2014
Sales Cloud	$	630.4	$	576.6
Service Cloud	407.7		294.8
Salesforce1 Platform and Other	224.0		164.9
Marketing Cloud	143.2		111.0
Total	$	1,405.3	$	1,147.3

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Subscription and support revenues from Analytics Cloud and Communities Cloud, which were introduced in October 2014, were not significant for the three months ended April 30, 2015. The Analytics Cloud revenue is included with Salesforce1 Platform and Other in the table above. Communities Cloud revenue is included in either Sales Cloud, Service Cloud or Salesforce1 Platform and Other revenue depending on the primary service offering purchased.

In situations where a customer purchases multiple cloud offerings, such as through an Enterprise License Agreement, we allocate the contract value to each core service offering based on the customer’s estimated product demand plan and the service that was provided at the inception of the contract. We do not update these allocations based on actual product usage during the term of the contract. We have allocated approximately 10 percent of our total subscription and support revenues for the three months ended April 30, 2015 and 2014, based on customers’ estimated product demand plans and these allocated amounts are included in the table above.

Additionally, some of our core service offerings have similar features and functions. For example, customers may use the Sales Cloud, the Service Cloud or our Salesforce1 Platform to record account and contact information, which are similar features across these core service offerings. Depending on a customer’s actual and projected business requirements, more than one core service offering may satisfy the customer’s current and future needs. We record revenue based on the individual products ordered by a customer, and not according to the customer’s business requirements and usage. In addition, as we introduce new features and functions within each offering, and refine our allocation methodology for changes in our business, we do not expect it to be practical to adjust historical revenue results by core service offering for comparability. Accordingly, comparisons of revenue performance by core service offering over time may not be meaningful.

Our Sales Cloud service offering is our most widely distributed service offering and has historically been the largest contributor of subscription and support revenues. As a result, Sales Cloud has the most international exposure and foreign exchange rate exposure relative to the other cloud service offerings. Conversely, revenue for Marketing Cloud is primarily derived from the Americas, with little impact from foreign exchange rate movement. We estimate that for the remainder of fiscal 2016, subscription and support revenues from the Sales Cloud service offering will continue to be the largest contributor of subscription and support revenue, and foreign currency will continue to have a more pronounced impact on Sales Cloud subscription and support revenues than revenues from our other cloud service offerings.

Seasonal Nature of Deferred Revenue, Accounts Receivable and Operating Cash Flow

Deferred revenue primarily consists of billings to customers for our subscription service. Over 90 percent of the value of our billings to customers is for our subscription and support service. We generally invoice our customers in annual cycles. Approximately 75 percent of all subscription and support invoices were issued with annual terms during the three months ended April 30, 2015 in comparison to nearly 68 percent during the same period a year ago. Occasionally, we bill customers for their multi-year contract on a single invoice which results in an increase in noncurrent deferred revenue. We typically issue renewal invoices in advance of the renewal service period, and depending on timing, the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters. This may result in an increase in deferred revenue and accounts receivable. There is a disproportionate weighting towards annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns. Our fourth quarter has historically been our strongest quarter for new business and renewals. The year on year compounding effect of this seasonality in both billing patterns and overall new and renewal business causes the value of invoices that we generate in the fourth quarter for both new business and renewals to increase as a proportion of our total annual billings. Accordingly, because of this billing activity, our first quarter is historically our largest collections and operating cash flow quarter.

The sequential quarterly changes in accounts receivable and the related deferred revenue and operating cash flow during the first quarter of our fiscal year are not necessarily indicative of the billing activity that occurs for the following quarters as displayed below (in thousands, except unbilled deferred revenue):

	April 30, 2015
Fiscal 2016
Accounts receivable, net	$	926,381
Deferred revenue, current and noncurrent	3,056,820
Operating cash flow (1)	730,857
Unbilled deferred revenue, a non-GAAP measure	6.0 bn

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	April 30, 2014		July 31, 2014		October 31, 2014		January 31, 2015
Fiscal 2015
Accounts receivable, net	$	684,155	$	834,323	$	794,590	$	1,905,506
Deferred revenue, current and noncurrent	2,324,615		2,352,904		2,223,977		3,321,449
Operating cash flow (1)	473,087		245,893		122,511		332,223
Unbilled deferred revenue, a non-GAAP measure	4.8 bn		5.0 bn		5.4 bn		5.7 bn

	April 30, 2013		July 31, 2013		October 31, 2013		January 31, 2014
Fiscal 2014
Accounts receivable, net	$	502,609	$	599,543	$	604,045	$	1,360,837
Deferred revenue, current and noncurrent	1,733,160		1,789,648		1,734,619		2,522,115
Operating cash flow (1)	283,189		183,183		137,859		271,238
Unbilled deferred revenue, a non-GAAP measure	3.6 bn		3.8 bn		4.2 bn		4.5 bn

(1) Operating cash flow represents net cash provided by operating activities for the three months ended in the periods stated above.

Unbilled Deferred Revenue, a Non-GAAP Measure

The deferred revenue balance on our condensed consolidated balance sheets does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Unbilled deferred revenue represents future billings under our subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. Unbilled deferred revenue was approximately $6.0 billion as of April 30, 2015 and approximately $5.7 billion as of January 31, 2015. Our typical contract length is between 12 and 36 months. We expect that the amount of unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of large customer subscription agreements, varying billing cycles of subscription agreements, the specific timing of customer renewals, foreign currency fluctuations, the timing of when unbilled deferred revenue is to be recognized as revenue, and changes in customer financial circumstances. For multi-year subscription agreements billed annually, the associated unbilled deferred revenue is typically high at the beginning of the contract period, zero just prior to renewal, and increases if the agreement is renewed. Low unbilled deferred revenue attributable to a particular subscription agreement is often associated with an impending renewal and may not be an indicator of the likelihood of renewal or future revenue from such customer. Accordingly, we expect that the amount of aggregate unbilled deferred revenue will change from year-to-year depending in part upon the number and dollar amount of subscription agreements at particular stages in their renewal cycle. Such fluctuations are not a reliable indicator of future revenues. Unbilled deferred revenue does not include minimum revenue commitments from indirect sales channels, as we recognize revenue, deferred revenue, and any unbilled deferred revenue upon sell-through to an end user customer.

Cost of Revenues and Operating Expenses

Cost of Revenues. Cost of subscription and support revenues primarily consists of expenses related to hosting our service and providing support, the costs of data center capacity, depreciation or operating lease expense associated with computer equipment and software, allocated overhead, amortization expense associated with capitalized software related to our services and acquired developed technologies and certain fees paid to various third parties for the use of their technology, services and data. We allocate overhead such as information technology infrastructure, rent and occupancy charges based on headcount. Employee benefit costs and taxes are allocated based upon a percentage of total compensation expense. As such, general overhead expenses are reflected in each cost of revenue and operating expense category. Cost of professional services and other revenues consists primarily of employee-related costs associated with these services, including stock-based expenses, the cost of subcontractors and allocated overhead. The cost of providing professional services is significantly higher as a percentage of the related revenue than for our enterprise cloud computing subscription service due to the direct labor costs and costs of subcontractors.

We intend to continue to invest additional resources in our enterprise cloud computing services. For example, we have invested in additional database software and we plan to open additional data centers and expand our current data center capacity in the future. As we acquire new businesses and technologies, the amortization expense associated with this activity will be included in cost of revenues. Additionally, as we enter into new contracts with third parties for the use of their technology, services or data, or as our sales volume grows, the fees paid to use such technology or services may increase. The

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timing of these additional expenses will affect our cost of revenues, both in terms of absolute dollars and as a percentage of revenues, in the affected periods.

Research and Development. Research and development expenses consist primarily of salaries and related expenses, including stock-based expenses, the costs of our development and test data center and allocated overhead. We continue to focus our research and development efforts on adding new features and services, integrating acquired technologies, increasing the functionality and security and enhancing the ease of use of our enterprise cloud computing services. Our proprietary, scalable and secure multi-tenant architecture enables us to provide all of our customers with a service based on a single version of our application. As a result, we do not have to maintain multiple versions, which enables us to have relatively lower research and development expenses as compared to traditional enterprise software companies.

We expect that in the future, research and development expenses will increase in absolute dollars and may increase as a percentage of total revenues as we invest in building the necessary employee and system infrastructure required to support the development of new, and improve existing, technologies and the integration of acquired businesses and technologies.

Marketing and Sales. Marketing and sales expenses are our largest cost and consist primarily of salaries and related expenses, including stock-based expenses, for our sales and marketing staff, including commissions, payments to partners, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities.

We plan to continue to invest in marketing and sales by expanding our domestic and international selling and marketing activities, building brand awareness, attracting new customers and sponsoring additional marketing events. The timing of these marketing events, such as our annual and largest event, Dreamforce, will affect our marketing costs in a particular quarter. We expect that in the future, marketing and sales expenses will increase in absolute dollars and continue to be our largest cost.

General and Administrative. General and administrative expenses consist of salaries and related expenses, including stock-based expenses, for finance and accounting, legal, internal audit, human resources and management information systems personnel, legal costs, professional fees, other corporate expenses and allocated overhead. We expect that in the future, general and administrative expenses will increase in absolute dollars as we invest in our infrastructure and we incur additional employee related costs, professional fees and insurance costs related to the growth of our business and international expansion. We expect general and administrative costs as a percentage of total revenues to either remain flat or decrease for the next several quarters.

Stock-Based Expenses. Our cost of revenues and operating expenses include stock-based expenses related to equity plans for employees and non-employee directors. We recognize our stock-based compensation as an expense in the statement of operations based on their fair values and vesting periods. These charges have been significant in the past and we expect that they will increase as our stock price increases, as we acquire more companies, as we hire more employees and seek to retain existing employees.

During the three months ended April 30, 2015, we recognized stock-based expense of $142.6 million. As of April 30, 2015, the aggregate stock compensation remaining to be amortized to costs and expenses over a weighted-average period of 2.0 years was $1.3 billion. We expect this stock compensation balance to be amortized as follows: $403.3 million during the remaining nine months of fiscal 2016; $414.1 million during fiscal 2017; $297.9 million during fiscal 2018; $143.9 million during fiscal 2019 and $2.5 million during fiscal 2020. The expected amortization reflects only outstanding stock awards as of April 30, 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 and the Purchase of 50 Fremont. Our cost of revenues, operating expenses and other expense 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, acquired leases and customer relationships. We expect this expense to increase as we acquire more businesses.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed 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.

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We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed 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 condensed 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 recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized after the services are performed.

Multiple Deliverable Arrangements

We enter into arrangements with multiple deliverables that generally include multiple subscriptions, premium support, and professional services. If the deliverables have standalone value upon delivery, we account for each deliverable separately. Subscription services have standalone value as such services are often sold separately. In determining whether professional services have standalone value, we consider the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription service start date, and the contractual dependence of the subscription service on the customer’s satisfaction with the professional services work. To date, we have concluded that all of the professional services included in multiple deliverable arrangements executed have standalone value.

Multiple deliverables included in an arrangement are separated into different units of accounting and the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. We determine the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (“VSOE”), if available, or our best estimate of selling price (“BESP”), if VSOE is not available. We have determined that third-party evidence (“TPE”) is not a practical alternative due to differences in our service offerings compared to other parties and the availability of relevant third-party pricing information. The amount of revenue allocated to delivered items is limited by contingent revenue, if any.

For certain professional services, we have established VSOE as a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. We have not established VSOE for our subscription services due to lack of pricing consistency, the introduction of new services and other factors. Accordingly, we use our BESP to determine the relative selling price.

We determined BESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration include our discounting practices, the size and volume of our transactions, the customer demographic, the geographic area where our services are sold, our price lists, our go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by management, taking into

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consideration the go-to-market strategy. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP.

Deferred Revenue. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription service described above and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual installments. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business linearity within the quarter.

Deferred revenue that will be recognized during the succeeding twelve month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent.

Deferred Commissions. We defer commission payments to our direct sales force. The commissions are deferred and amortized to sales expense over the non-cancelable terms of the related subscription contracts with our customers, which are typically 12 to 36 months. The commission payments, which are paid in full the month after the customer’s service commences, are a direct and incremental cost of the revenue arrangements. The deferred commission amounts are recoverable through the future revenue streams under the non-cancelable customer contracts. We believe this is the preferable method of accounting as the commission charges are so closely related to the revenue from the non-cancelable customer contracts that they should be recorded as an asset and charged to expense over the same period that the subscription revenue is recognized.

During the three months ended April 30, 2015, we deferred $50.1 million of commission expenditures and we amortized $77.2 million to sales expense. During the same period a year ago, we deferred $40.9 million of commission expenditures and we amortized $59.9 million to sales expense. Deferred commissions on our condensed consolidated balance sheets totaled $361.1 million at April 30, 2015 and $388.2 million at January 31, 2015.

Capitalized Internal-Use Software Costs. We are required to follow the guidance of Accounting Standards Codification 350 (“ASC 350”), Intangibles- Goodwill and Other in accounting for the cost of computer software developed for internal-use and the accounting for web-based product development costs. ASC 350 requires companies to capitalize qualifying computer software costs, which are incurred during the application development stage, and amortize these costs on a straight-line basis over the estimated useful life of the respective asset. We deliver our enterprise cloud computing solutions as a service via all the major Internet browsers and on leading major mobile device operating systems. As a result of this software as a service delivery model, we believe we have larger capitalized costs as compared to traditional enterprise software companies as they are required to use a different accounting standard.

Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Goodwill and Long-Lived Assets. We make estimates, assumptions, and judgments when valuing goodwill and other intangible assets in connection with the initial purchase price allocation of an acquired entity, as well as when evaluating the recoverability of our goodwill and other intangible assets on an ongoing basis. These estimates are based upon a number of factors, including historical experience, market conditions, and information obtained from the management of acquired companies. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected attrition rates, anticipated growth in revenue from the acquired customers and acquired technology, and the expected use of the acquired assets. These factors are also considered in determining the useful life of acquired intangible assets. The amounts and useful lives assigned to identified intangible assets impacts the amount and timing of future amortization expense.

The value of our goodwill and intangible assets could be impacted by future adverse changes such as, but not limited to: a substantial decline in our market capitalization; an adverse action or assessment by a regulator; and unanticipated competition.

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We evaluate and test the recoverability of our goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable. Each period we evaluate the estimated remaining useful life of our intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. We evaluate long-lived assets, such as property and equipment, and purchased intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such events or changes in circumstances include, but are not limited to, a significant decrease in the fair value of the underlying asset, a significant decrease in the benefits realized from the acquired assets, difficulty and delays in integrating the business or a significant change in the operations of the acquired assets or use of an asset. A long-lived asset is considered impaired if its carrying amount exceeds the estimated future undiscounted cash flows the asset is expected to generate. If a long-lived asset is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group.

Business Combinations. Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies. We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.

Examples of critical estimates in valuing certain of the intangible assets and goodwill we have acquired include but are not limited to:

• future expected cash flows from subscription and support contracts, professional services contracts, other customer contracts and acquired developed technologies and patents;

• the acquired company’s trade name, trademark and existing customer relationship, as well as assumptions about the period of time the acquired trade name and trademark will continue to be used in our offerings;

• uncertain tax positions and tax related valuation allowances assumed; and

• discount rates.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

Stock-Based Options and Awards. We recognize the fair value of our stock options and awards on a straight-line basis over the requisite service period of the option or award which is the vesting term of generally four years for stock options and restricted stock awards and one year for shares issued pursuant to our Employee Stock Purchase Plan (“ESPP”). The fair value of each option or ESPP share or stock purchase right is estimated on the date of grant using the Black-Scholes option pricing model. The estimated forfeiture rate applied is based on historical forfeiture rates. We evaluate the forfeiture rates at least annually, or when events or circumstances indicate a change may be needed. This may cause a fluctuation in our stock-based expense in the period of change. Inputs into the Black-Scholes option pricing model include:

• The estimated life for the stock options which is estimated based on an actual analysis of expected life. The estimated life for shares issued pursuant to our ESPP is based on the two purchase periods within the 12 month offering period;

• The risk free interest rate which is based on the rate for a U.S. government security with the same estimated life at the time of the option grant and the stock purchase rights;

• The future stock price volatility which is estimated considering both our observed option-implied volatilities and our historical volatility calculations. We believe this is the best estimate of the expected volatility over the expected life of our stock options and stock purchase rights; and

• The probability of performance conditions, if any, that affect the vesting of certain awards being achieved. Expense is only recognized for those shares expected to vest.

Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the condensed consolidated statements of operations in the period that includes the enactment date. At each of the interim financial reporting periods, we compute our tax provision by applying an estimated annual effective tax rate to year to date ordinary income and adjust the provision for discrete tax items recorded in the same period. The estimated annual effective tax rate at each interim period represents our best estimate based on

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evaluations of possible future transactions and may be subject to subsequent refinement or revision. We consider the valuation allowance in estimating the annual effective tax rate. As a result, the annual effective tax rate could be volatile and is therefore difficult to forecast in future periods.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute our business plans and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to unrecognized tax benefits in our income tax provision.

Strategic Investments. We report our investments in non-marketable equity and debt securities, which consist of minority equity and debt investments in privately-held companies, at cost or fair value when an event or circumstance indicates an other-than-temporary decline in value has occurred. Management evaluates financial results, earnings trends, technology milestones and subsequent financing of these companies, as well as the general market conditions to identify indicators of other-than-temporary impairment. In determining the estimated fair value of our strategic investments in privately-held companies, we utilize the most recent data available to us. Valuations of privately-held companies are inherently complex due to the lack of readily available market data.

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Results of Operations

The following tables set forth selected data for each of the periods indicated (in thousands):

	Three Months Ended April 30,
	2015			2014
Revenues:
Subscription and support	$	1,405,287		$	1,147,306
Professional services and other	105,880			79,466
Total revenues	1,511,167			1,226,772
Cost of revenues (1)(2):
Subscription and support	274,241			208,947
Professional services and other	107,561			83,358
Total cost of revenues	381,802			292,305
Gross profit	1,129,365			934,467
Operating expenses (1)(2):
Research and development	222,128			188,358
Marketing and sales	736,938			639,355
General and administrative	175,811			162,095
Operating lease termination resulting from purchase of 50 Fremont, net	(36,617		)	0
Total operating expenses	1,098,260			989,808
Income (loss) from operations	31,105			(55,341		)
Investment income	4,561			1,778
Interest expense	(16,675		)	(20,359		)
Other expense (1)(3)	(918		)	(10,847		)
Income (loss) before provision for income taxes	18,073			(84,769		)
Provision for income taxes	(13,981		)	(12,142		)
Net income (loss)	$	4,092		$	(96,911	)

(1) Amounts related to amortization of purchased intangibles from business combinations, as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Cost of revenues	$	19,690	$	28,672
Marketing and sales	20,027		14,965
Other non-operating expense	815		0

(2) Amounts related to stock-based expenses, as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Cost of revenues	$	15,381	$	11,810
Research and development	31,242		27,284
Marketing and sales	70,534		67,133
General and administrative	25,403		24,865

(3) Amount includes approximately $8.5 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the three months ended April 30, 2014.

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Revenues by geography were as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Americas	$	1,115,120	$	876,377
Europe	258,805		230,810
Asia Pacific	137,242		119,585
	$	1,511,167	$	1,226,772

Americas revenue attributed to the United States was approximately 95 percent and 94 percent for the three months ended April 30, 2015 and 2014, respectively.

The following tables set forth selected condensed consolidated statements of operations data for each of the periods indicated as a percentage of total revenues:

	Three Months Ended April 30,
	2015		2014
Revenues:
Subscription and support	93	%	94	%
Professional services and other	7		6
Total revenues	100		100
Cost of revenues (1)(2):
Subscription and support	18		17
Professional services and other	7		7
Total cost of revenues	25		24
Gross profit	75		76
Operating expenses (1)(2):
Research and development	15		16
Marketing and sales	49		52
General and administrative	11		13
Operating lease termination resulting from purchase of 50 Fremont, net	(2	)	0
Total operating expenses	73		81
Income (loss) from operations	2		(5	)
Investment income	0		0
Interest expense	(1	)	(1	)
Other expense (1)	0		(1	)
Income (loss) before provision for income taxes	1		(7	)
Provision for income taxes	(1	)	(1	)
Net income (loss)	0	%	(8	)%

(1) Amortization of purchased intangibles from business combinations as a percentage of total revenues, as follows:

	Three Months Ended April 30,
	2015		2014
Cost of revenues	1	%	2	%
Marketing and sales	1		1
Other non-operating expense	0		0

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(2) Stock-based expense as a percentage of total revenues, as follows:

	Three Months Ended April 30,
	2015		2014
Cost of revenues	1	%	1	%
Research and development	2		2
Marketing and sales	5		5
General and administrative	2		2

Revenues by geography as a percentage of total revenues, as follows:

	Three Months Ended April 30,
	2015		2014
Revenues by geography:
Americas	74	%	71	%
Europe	17		19
Asia Pacific	9		10
	100	%	100	%

Revenues and deferred revenue in constant currency, as follows:

Revenue constant currency growth rates (as compared to the comparable prior periods)	Three Months Ended April 30, 2015 compared to Three Months Ended April 30, 2014	Three Months Ended April 30, 2014 compared to Three Months Ended April 30, 2013
Americas	27%	39%
Europe	28%	35%
Asia Pacific	27%	26%
Total growth	27%	37%

We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the weighted average exchange rate for the quarter being compared to for growth rate calculations presented, rather than the actual exchange rates in effect during that period.

	April 30, 2015 compared to April 30, 2014	January 31, 2015 compared to January 31, 2014
Deferred revenue, current and noncurrent constant currency growth rates (as compared to the comparable prior periods)
Total growth	36%	35%

To present the information above, we convert the deferred revenue balances in local currencies in previous comparable periods using the United States dollar currency exchange rate as on the most recent balance sheet date.

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Three Months Ended April 30, 2015 and 2014

Revenues.

	Three Months Ended April 30,				Variance
(in thousands)	2015		2014		Dollars		Percent
Subscription and support	$	1,405,287	$	1,147,306	$	257,981	22%
Professional services and other	105,880		79,466		26,414		33%
Total revenues	$	1,511,167	$	1,226,772	$	284,395	23%

Total revenues were $1.5 billion for the three months ended April 30, 2015, compared to $1.2 billion during the same period a year ago, an increase of $0.3 billion, or 23 percent. On a constant currency basis, total revenues grew 27 percent. Subscription and support revenues were $1.4 billion, or 93 percent of total revenues, for the three months ended April 30, 2015, compared to $1.1 billion, or 94 percent of total revenues, during the same period a year ago, an increase of $0.3 billion, or 22 percent. The increase in subscription and support revenues was due almost entirely to volume-driven increases from new business, which includes new customers, upgrades and additional subscriptions from existing customers. Our attrition rate, which is consistent with the prior year, also played a role in the increase in subscription and support revenues. We continue to invest in a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped maintain our attrition rate. The net price per user per month for our three primary offerings, Professional Edition, Enterprise Edition and Unlimited Edition, varies from period to period, but has remained within a consistent range over the past eight quarters. Changes in the net price per user per month has not been a significant driver of revenue growth for the periods presented. Professional services and other revenues were $105.9 million, or seven percent of total revenues, for the three months ended April 30, 2015, compared to $79.5 million, or six percent of total revenues, for the same period a year ago, an increase of $26.4 million, or 33 percent. The increase in professional services and other revenues was primarily attributable to higher demand for services from an increased number of customers.

Revenues in Europe and Asia Pacific accounted for $396.0 million, or 26 percent of total revenues, for the three months ended April 30, 2015, compared to $350.4 million, or 29 percent of total revenues, during the same period a year ago, an increase of $45.7 million, or 13 percent. The increase in revenues on a total dollar basis outside of the Americas was the result of the increasing acceptance of our service, our focus on marketing our services internationally, additional resources and consistent attrition rates as a result of the reasons stated above. Revenues outside of the Americas increased on a total dollar basis in the three months ended April 30, 2015 despite an overall strengthening of the U.S. dollar, which reduced aggregate international revenues by $52.0 million compared to the same period a year ago. We expect revenues outside of the Americas to continue to be negatively impacted in fiscal 2016 by the strengthening of the U.S. dollar relative to the Euro, Japanese yen, Australian dollar and British pound in comparison to similar periods in the prior year.

Cost of Revenues.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Subscription and support	$	274,241		$	208,947		$	65,294
Professional services and other	107,561			83,358			24,203
Total cost of revenues	$	381,802		$	292,305		$	89,497
Percent of total revenues	25		%	24		%

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Cost of revenues was $381.8 million, or 25 percent of total revenues, for the three months ended April 30, 2015, compared to $292.3 million, or 24 percent of total revenues, during the same period a year ago, an increase of $89.5 million. The increase in absolute dollars was primarily due to an increase of $26.6 million in employee-related costs, an increase of $3.6 million in stock-based expenses, an increase of $36.5 million in service delivery costs, primarily due to our efforts to increase data center capacity, an increase of $15.3 million in professional and outside services, an increase of $5.5 million in allocated overhead and an increase of $10.8 million in depreciation of property and equipment, offset by a decrease of $9.0 million in amortization of purchased intangibles. We have increased our headcount by 24 percent since April 30, 2014 to meet the higher demand for services from our customers. We intend to continue to invest additional resources in our enterprise cloud computing services and data center capacity. Additionally, the amortization of purchased intangible assets may increase as we acquire additional businesses and technologies. We also plan to add additional employees in our professional services group to facilitate the adoption of our services. The timing of these expenses will affect our cost of revenues, both in terms of absolute dollars and as a percentage of revenues in future periods.

The cost of professional services and other revenues exceeded the related revenue during the three months ended April 30, 2015 by $1.7 million as compared to $3.9 million during the same period a year ago. We expect the cost of professional services to continue to exceed revenue from professional services in future fiscal quarters. We believe that this investment in professional services facilitates the adoption of our service offerings.

Research and Development.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Research and development	$	222,128		$	188,358		$	33,770
Percent of total revenues	15		%	16		%

Research and development expenses were $222.1 million, or 15 percent of total revenues, for the three months ended April 30, 2015, compared to $188.4 million, or 16 percent of total revenues, during the same period a year ago, an increase of $33.8 million. The increase in absolute dollars was primarily due to an increase of $23.6 million in employee-related costs, an increase of of $4.0 million in stock-based expense, an increase of $2.7 million in development and test data center expense and an increase of $3.5 million in allocated overhead. We increased our research and development headcount by 21 percent since April 30, 2014 in order to improve and extend our service offerings and develop new technologies. 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 add employees and invest in technology to support the development of new, and improve existing, technologies and the integration of acquired technologies.

Marketing and Sales.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Marketing and sales	$	736,938		$	639,355		$	97,583
Percent of total revenues	49		%	52		%

Marketing and sales expenses were $736.9 million, or 49 percent of total revenues, for the three months ended April 30, 2015, compared to $639.4 million, or 52 percent of total revenues, during the same period a year ago, an increase of $97.6 million. The increase in absolute dollars was primarily due to an increase of $64.7 million in employee-related costs of which $17.3 million was due to increased amortization of deferred commissions, an increase of $3.4 million in stock-based expense, an increase of $12.9 million in advertising expenses and event costs, an increase of $5.1 million due to amortization of purchased intangibles, an increase of $5.7 million in professional and outside services and an increase of $5.7 million in allocated overhead. Our marketing and sales headcount increased by 18 percent since April 30, 2014. The increase in headcount was primarily attributable to hiring additional sales personnel to focus on adding new customers and increasing penetration within our existing customer base.

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General and Administrative.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
General and administrative	$	175,811		$	162,095		$	13,716
Percent of total revenues	11		%	13		%

General and administrative expenses were $175.8 million, or 11 percent of total revenues, for the three months ended April 30, 2015, compared to $162.1 million, or 13 percent of total revenues, during the same period a year ago, an increase of $13.7 million. The increase was primarily due to an increase of $6.9 million in employee-related costs and an increase of $4.9 million in professional services expense. Our general and administrative headcount increased by nine percent since April 30, 2014 as we added personnel to support our growth.

Operating lease termination resulting from purchase of 50 Fremont, net.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Operating lease termination resulting from purchase of 50 Fremont, net	$	(36,617	)	$	0		$	(36,617	)
Percent of total revenues	(2		)%	0		%

Operating lease termination resulting from purchase of 50 Fremont, net for the three months ended April 30, 2015 was $36.6 million. In connection with the purchase, we recognized a net non-cash gain totaling approximately $36.6 million on the termination of the lease signed in January 2012.

Income (loss) from operations.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Income (loss) from operations	$	31,105		$	(55,341	)	$	86,446
Percent of total revenues	2		%	(5		)%

Income from operations for the three months ended April 30, 2015 was $31.1 million and included $142.6 million of stock-based expenses, $39.7 million of amortization of purchased intangibles and a $36.6 non-cash, one-time net gain from the operating lease termination described above. During the same period a year ago, loss from operations was $55.3 million and included $131.1 million of stock-based expenses and $43.6 million of amortization of purchased intangibles.

Investment income.

	Three Months Ended April 30,				Variance Dollars
(in thousands)	2015		2014
Investment income	$	4,561	$	1,778	$	2,783

Investment income consists of income on our cash and marketable securities balances. Investment income was $4.6 million for the three months ended April 30, 2015 and was $1.8 million during the same period a year ago. The increase was due to earnings on higher cash and marketable securities balances and $1.5 million of higher realized net gains.

Interest expense.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Interest expense	$	(16,675	)	$	(20,359	)	$	3,684
Percent of total revenues	(1		)%	(1		)%

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Interest expense consists of interest on our convertible senior notes, capital leases, loan assumed on 50 Fremont and revolving credit facility. Interest expense, net of interest costs capitalized, was $16.7 million for the three months ended April 30, 2015 and was $20.4 million during the same period a year ago. The decrease was primarily due to the maturity of our 0.75% convertible senior notes during fiscal 2015.

Other expense.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Other expense	$	(918	)	$	(10,847	)	$	9,929

Other expense primarily consists of non-operating costs such as foreign currency transaction gains and losses, costs associated with real estate transactions and losses on derecognition of debt. Other expense for the three months ended April 30, 2014 includes an $8.5 million loss on conversions of the convertible 0.75% Senior Notes due January 2015.

Provision for income taxes.

	Three Months Ended April 30,						Variance Dollars
(in thousands)	2015			2014
Provision for income taxes	$	(13,981	)	$	(12,142	)	$	(1,839	)
Effective tax rate	77		%	(14		)%

We reported a tax provision of $14.0 million on a pretax income of $18.1 million, which resulted in an effective tax rate of 77 percent for the three months ended April 30, 2015. The tax provision recorded was primarily related to income taxes in profitable jurisdictions outside of the U.S.

We recorded a tax expense of $12.1 million with a pretax loss of $84.8 million, which resulted in an effective tax rate of negative 14 percent for the three months ended April 30, 2014. The tax provision recorded was related to income taxes in profitable jurisdictions outside the U.S. and the current tax expense in the U.S. We incurred a U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock. This U.S. current tax expense was partially offset by tax benefit attributable to losses in certain U.S. states with no valuation allowance.

Liquidity and Capital Resources

At April 30, 2015, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $1.9 billion and accounts receivable of $0.9 billion.

Net cash provided by operating activities was $730.9 million during the three months ended April 30, 2015 and $473.1 million during the same period a year ago. Cash provided by operating activities has historically been affected by the amount of net income (loss) adjusted for non-cash expense items such as depreciation and amortization, amortization of purchased intangibles from business combinations, amortization of debt discount, discrete items such as the non-cash gain from termination of 50 Fremont lease, net and the expense associated with stock-based awards; the reclassification of excess tax benefits from employee stock plans to cash flows from financing activities; the timing of employee related costs including commissions and bonus payments; the timing of collections from our customers, which is our largest source of operating cash flows; and changes in working capital accounts.

Our working capital accounts consist of accounts receivables and prepaid assets and other current assets. Claims against working capital include accounts payable, accrued expenses and other current liabilities and payments related to our convertible senior notes and loan secured by 50 Fremont. Our working capital may be impacted by factors in future periods, certain amounts and timing of which are seasonal, such as billings to customers for subscriptions and support services and the subsequent collection of those billings.

As described above in “Seasonal Nature of Deferred Revenue and Accounts Receivable,” our fourth quarter has historically been our strongest quarter for new business and renewals, and correspondingly the first quarter for cash collections. The year on year compounding effect of this seasonality in both billing patterns and overall business causes both the value of invoices that we generate in the fourth quarter and cash collections in the first quarter to increase as a proportion of our total annual billings.

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We generally invoice our customers for our subscription and services contracts in advance in annual installments. We typically issue renewal invoices in advance of the renewal service period, and depending on timing, the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters. Such invoice amounts are initially reflected in accounts receivable and deferred revenue, which is reflected on the balance sheets. The operating cash flow benefit of increased billing activity generally occurs in the subsequent quarter when we collect from our customers. As such, our first quarter has become our largest collections and operating cash flow quarter.

Net cash provided by operating activities during the three months ended April 30, 2015 increased $257.8 million over the same period a year ago primarily due to higher collections from our fourth quarter billing activity than in the prior year and higher net income after adjusting for depreciation and amortization, discrete items such as the gain on office lease termination and loss on conversions of convertible senior notes, stock-based expenses and the timing of payments against accounts payable, accrued expenses and other current liabilities.

Net cash used in investing activities was $536.1 million during the three months ended April 30, 2015 and $210.4 million during the same period a year ago. The net cash used in investing activities during the three months ended April 30, 2015 primarily related to the purchase of 50 Fremont, strategic investments and capital expenditures including new office build-outs and investment of cash balances offset by proceeds from sales and maturities of marketable securities.

Net cash used in financing activities was $157.6 million during the three months ended April 30, 2015 as compared to net cash provided by financing activities of $219.2 million during the same period a year ago. Net cash used in financing activities during the three months ended April 30, 2015 consisted primarily of $16.8 million of principal payments on capital leases and $300.0 million of payments on our revolving credit facility, offset by $155.0 million from proceeds from equity plans.

In March 2013, we issued $1.15 billion of 0.25% convertible senior notes due in April 2018 (the “Notes”) and concurrently entered into convertible notes hedges (the “0.25% Note Hedges”) and separate warrant transactions (the “Warrants”). The Notes will mature in April 2018, unless earlier converted. Upon conversion of any Notes, we will deliver cash up to the principal amount of the Notes and, with respect to any excess conversion value greater than the principal amount of the Notes, shares of our common stock, cash, or a combination of both.

The Notes will be convertible if during any 20 trading days during the 30 consecutive trading days of any fiscal quarter, our common stock trades at a price exceeding 130% of the conversion price of $66.44 per share applicable to the Notes. The Notes have not yet been convertible at the holders’ option. The Notes are classified as a noncurrent liability on our condensed consolidated balance sheet as of April 30, 2015. Our common stock did not trade at a price exceeding 130% of the conversion price of $66.44 per share applicable to the Notes during the fiscal quarter ended April 30, 2015. Accordingly, the Notes will not be convertible at the holders’ option for the quarter ending July 31, 2015, and will remain classified as a noncurrent liability on our condensed consolidated balance sheets.

In October 2014, we entered into a credit agreement (the “Credit Agreement”) which provides for a $650.0 million unsecured revolving credit facility (the “Credit Facility”) that matures in October 2019. In March 2015, we paid down the $300.0 million of outstanding borrowings held under the Credit Facility and related interest in full. We may use any future borrowings under the Credit Facility for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. We may borrow amounts under the Credit Facility at any time during the term of the Credit Agreement. We may also prepay the borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may be reborrowed.

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on our ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on our activities each defined specifically in the Credit Agreement. We were in compliance with the Credit Agreement’s covenants as of April 30, 2015.

In December 2014, the Company entered into an agreement with a third-party provider under which the Company will purchase certain infrastructure services for three years. The agreement provides that the Company will pay $33.0 million in fiscal 2016 and $36.0 million in both fiscal 2017 and 2018 for infrastructure services under the agreement.

In February 2015, the Company acquired 50 Fremont Street, a 41-story building totaling approximately 817,000 rentable square feet located in San Francisco, California (“50 Fremont”). At the time of the acquisition, the Company was leasing approximately 500,000 square feet of the available space in 50 Fremont. See Note 4 “Business Combinations” in the Notes to the Condensed Consolidated Financial Statements.

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The total purchase price for 50 Fremont was $637.6 million. In financing the purchase price, we used $115.0 million of restricted cash on hand and assumed a $200.0 million loan secured by the property with the remainder paid in cash.

Our cash, cash equivalents and marketable securities are comprised primarily of corporate notes and other obligations, U.S. treasury securities, U.S. agency obligations, government obligations, collateralized mortgage obligations, mortgage backed securities, time deposits, money market mutual funds and municipal securities.

As of April 30, 2015, we have a total of $67.9 million in letters of credit outstanding in favor of certain landlords for office space. To date, no amounts have been drawn against the letters of credit, which renew annually and expire at various dates through December 2030.

We do not have any special purpose entities, and other than operating leases for office space and computer equipment, we do not engage in off-balance sheet financing arrangements.

Our principal commitments consist of obligations under leases for office space, co-location data center facilities, and our development and test data center, as well as leases for computer equipment, software, furniture and fixtures. At April 30, 2015, the future non-cancelable minimum payments under these commitments were as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility
Fiscal Period:
Remaining nine months of fiscal 2016	$	86,398		$	227,050	$	1,777
Fiscal 2017	114,874			287,795		16,877
Fiscal 2018	119,086			244,615		21,107
Fiscal 2019	113,005			188,841		21,551
Fiscal 2020	201,507			181,765		21,995
Thereafter	0			1,052,718		252,517
Total minimum lease payments	634,870			$	2,182,784	$	335,824
Less: amount representing interest	(81,799		)
Present value of capital lease obligations	$	553,071

The majority of our operating lease agreements provide us with the option to renew. Our future operating lease obligations would change if we exercised these options and if we entered into additional operating lease agreements as we expand our operations.

The financing obligation above represents the total obligation for our lease of approximately 445,000 rentable square feet of office space in San Francisco, California. As of April 30, 2015, $145.3 million of the total obligation noted above was recorded to Financing obligation, building in progress - leased facility, which is included in “Other noncurrent liabilities” on the condensed consolidated balance sheets.

During the remaining nine months of fiscal 2016 and in future fiscal years, we have made and expect to continue to make additional investments in our infrastructure to scale our operations and increase productivity. We plan to upgrade or replace various internal systems to scale with the overall growth of the Company. Additionally, we expect capital expenditures to be higher in absolute dollars and remain consistent as a percentage of total revenues in future periods as a result of continued office build-outs, other leasehold improvements and data center investments.

In the future, we may enter into arrangements to acquire or invest in complementary businesses or joint ventures, services and technologies, and intellectual property rights. We may be required to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

We believe our existing cash, cash equivalents and short-term marketable securities and cash provided by operating activities will be sufficient to meet our working capital, capital expenditure and debt repayment needs over the next 12 months.

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New Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. This standard establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. In April 2015, the FASB proposed a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, ASU 2014-09 will be effective for fiscal 2019, including interim periods within that reporting period.  We are currently in the process of assessing the adoption methodology, which allows the amendment to be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial application. We are also evaluating the impact of the adoption of ASU 2014-09 on our condensed consolidated financial statements and have not determined whether the effect will be material to either our revenue results or our deferred commissions balances.

Non-GAAP Financial Measures

Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP earnings per share each meet the definition of a non-GAAP financial measure.

We use the non-GAAP measures of non-GAAP gross profit, non-GAAP operating profit and non-GAAP net income to provide an additional view of operational performance by excluding expenses and benefits that are not directly related to performance in any particular period. In addition to our GAAP measures we use these non-GAAP measures when planning, monitoring, and evaluating our performance. We believe that these non-GAAP measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business, as they exclude certain expenses and benefits. These items are excluded because the decisions which gave rise to them are not made to increase revenue in a particular period, but are made for our long-term benefit over multiple periods and we are not able to change or affect these items in any particular period.

We define non-GAAP net income as our total net income excluding the following components, which we believe are not reflective of our ongoing operational expenses. In each case, for the reasons set forth below, we believe that excluding the component provides useful information to investors and others in understanding and evaluating the impact of certain items to our operating results and future prospects in the same manner as us, in comparing financial results across accounting periods and to those of peer companies and to better understand the impact of these items on our gross margin and operating performance. Additionally, as significant, unusual or discrete events occur, the results may be excluded in the period in which the events occur.

• Stock-Based Expense. The Company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

• Amortization of Purchased Intangibles and Acquired Leases. The Company views 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, customer relationships and acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.

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• Amortization of Debt Discount. Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the Company’s $1.15 billion of convertible senior notes due 2018 that were issued in a private placement in March 2013. The imputed interest rate was approximately 2.53% for the convertible notes due 2018, while the actual coupon interest rate of the notes was 0.25%. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the Company’s operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the Company’s operational performance.

• Non-Cash Gains/Losses on Conversion of Debt. Upon settlement of the Company’s convertible senior notes, we attribute the fair value of the consideration transferred to the liability and equity components of the convertible senior notes. The difference between the fair value of consideration attributed to the liability component and the carrying value of the liability as of settlement date is recorded as a non-cash gain or loss on the statement of operations. Management believes that the exclusion of the non-cash gain/loss provides investors an enhanced view of the company’s operational performance.

• Gain on Sales of Land and Building Improvements.The Company views the non-operating gains associated with the sales of the land and building improvements at Mission Bay to be a discrete item. Management believes that the exclusion of the gains provides investors an enhanced view of the Company’s operational performance.

• Lease Termination Resulting from Purchase of Office Building. The Company views the non-cash, one-time gain associated with the termination of its lease at 50 Fremont to be a discrete item. Management believes that the exclusion of the gains provides investors an enhanced view of the Company’s operational performance.

• Income Tax Effects and Adjustments. During fiscal 2015, the Company began to compute and utilize a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of non-recurring and period-specific items such as changes in the tax valuation allowance and tax effects of acquisitions-related costs, since each of these items can vary in size and frequency. When projecting this long-term rate, the Company evaluated a three-year financial projection that excludes the impact of the following non-cash items: stock-based expense, amortization of purchased intangibles, amortization of acquired leases, amortization of debt discount, gains/losses on sales of land and building improvements, gains/losses on conversions of debt, and termination of office leases. The projected rate also assumes no new acquisitions in the three-year period, and takes into account other factors including the Company’s current tax structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where the Company operates. The non-GAAP tax rate for both fiscal 2016 and 2015 is 36.5%. The Company re-evaluates this long-term rate on an annual basis or if any significant events that may materially affect this long-term rate occur. This long-term rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the Company operates.

We define non-GAAP gross profit as our total revenues less cost of revenues, as reported on our condensed consolidated statement of operations, excluding the portions of stock-based expenses and amortization of purchased intangibles that are included in cost of revenues.

We define non-GAAP operating profit as our non-GAAP gross profit less operating expenses, as reported on our condensed consolidated statement of operations, excluding the portions of stock-based expenses, amortization of purchased intangibles and gain resulting from termination of our office lease that are included in operating expenses.

Non-GAAP earnings per share

Management uses the non-GAAP earnings per share to provide an additional view of performance by excluding items that are not directly related to performance in any particular period in the earnings per share calculation.

We define non-GAAP earnings per share as our non-GAAP net income, which excludes the above components, which we believe are not reflective of our ongoing operational expenses, divided by basic or diluted shares outstanding.

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Limitations on the use of non-GAAP financial measures

A limitation of our non-GAAP financial measures of non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP earnings per share is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-GAAP measures of non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP earnings per share should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based expense, if we did not pay a portion of compensation in the form of stock-based expense, the cash salary expense included in costs of revenues and operating expenses would be higher which would affect our cash position.

We compensate for these limitations by reconciling non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP earnings per share to the most comparable GAAP financial measure. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.

Our reconciliation of the non-GAAP financial measures of gross profit, operating profit, net income and earnings per share to the most comparable GAAP measure, “gross profit,” “income(loss) from operations,” “net income (loss)” and “net income (loss) per share” for the three months ended April 30, 2015 and 2014 are as follows (in thousands, except for share numbers):

	Three Months Ended April 30,
	2015		2014
Gross profit
GAAP gross profit	$	1,129,365	$	934,467
Plus:
Amortization of purchased intangibles	19,690		28,672
Stock-based expense	15,381		11,810
Non-GAAP gross profit	$	1,164,436	$	974,949

	Three Months Ended April 30,
	2015			2014
Income from operations
GAAP income (loss) from operations	$	31,105		$	(55,341	)
Plus:
Amortization of purchased intangibles	39,717			43,637
Stock-based expense	142,560			131,092
Less:
Operating lease termination resulting from purchase of 50 Fremont, net	(36,617		)	0
Non-GAAP income from operations	$	176,765		$	119,388

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	Three Months Ended April 30,
	2015			2014
Net income
GAAP net income (loss)	$	4,092		$	(96,911	)
Plus:
Amortization of purchased intangibles	39,717			43,637
Amortization of acquired lease intangible	815			0
Stock-based expense	142,560			131,092
Amortization of debt discount, net	6,059			10,984
Loss on conversion of debt	0			8,529
Less:
Operating lease termination resulting from purchase of 50 Fremont, net	(36,617		)	0
Income tax effects and adjustments	(48,291		)	(27,815		)
Non-GAAP net income	$	108,335		$	69,516

	Three Months Ended April 30,
	2015			2014
Non-GAAP diluted earnings per share
GAAP diluted income (loss) per share (a)	$	0.01		$	(0.16	)
Plus:
Amortization of purchased intangibles	0.06			0.07
Amortization of acquired lease intangible	0.00			0.00
Stock-based expenses	0.21			0.20
Amortization of debt discount, net	0.01			0.02
Loss on conversion of debt	0.00			0.01
Less:
Operating lease termination resulting from purchase of 50 Fremont, net	(0.06		)	0.00
Income tax effects and adjustments of Non-GAAP items	(0.07		)	(0.03		)
Non-GAAP diluted earnings per share	$	0.16		$	0.11
Shares used in computing diluted net income per share	664,310			648,000

a) Reported GAAP loss per share was calculated using the basic share count. Non-GAAP diluted earnings per share was calculated using the diluted share count.

Non-GAAP operating profit for the quarter ended April 30, 2015 was $176.8 million and $119.4 million for the same period a year ago, an increase of $57.4 million or 48 percent. During the first quarter of fiscal 2016 we remained focused on improving non-GAAP operating profit and expect to remain similarly focused for the remaining nine months of fiscal 2016.

The effects of dilutive securities were not included in the GAAP calculation of diluted earnings/loss per share for the three months ended April 30, 2014 because we had a net loss for the period and the effect would have been anti-dilutive. The following table reflects the effect of the dilutive securities on the basic share count used in the GAAP earnings/loss per share calculation to derive the share count used for the non-GAAP diluted earnings per share:

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	Three Months Ended April 30,
Supplemental Diluted Sharecount Information (in thousands):	2015	2014
Weighted-average shares outstanding for GAAP basic earnings per share	653,809	612,512
Effect of dilutive securities (1):
Convertible senior notes (2)	0	8,495
Warrants associated with the convertible senior note hedges (2)	0	13,220
Employee stock awards	10,501	13,773
Adjusted weighted-average shares outstanding and assumed conversions for Non-GAAP diluted earnings per share	664,310	648,000

(1) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three months ended April 30, 2014 because the effect would have been anti-dilutive.

(2) Upon maturity in fiscal 2015, the convertible 0.75% senior notes and associated warrants were settled. The 0.25% senior notes were not convertible, therefore no dilutive effect for shares outstanding for the three months ended April 30, 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar and Japanese Yen. We seek to minimize the impact of certain foreign currency fluctuations by hedging certain balance sheet exposures with foreign currency forward contracts. Any gain or loss from settling these contracts is offset by the loss or gain derived from the underlying balance sheet exposures. In accordance with our policy, the hedging contracts we enter into have maturities of less than three months. Additionally, by policy, we do not enter into any hedging contracts for trading or speculative purposes.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $1.9 billion at April 30, 2015. This amount was invested primarily in money market funds, time deposits, corporate notes and bonds, government securities and other debt securities with credit ratings of at least BBB or better. The cash, cash equivalents and short-term marketable securities are held for general corporate purposes including possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and capital expenditures. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. Our fixed-income portfolio is subject to interest rate risk.

An immediate increase or decrease in interest rates of 100-basis points at April 30, 2015 could result in a $12.7 million market value reduction or increase of the same amount. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.

At January 31, 2015, we had cash, cash equivalents and marketable securities totaling $1.9 billion. The fixed-income portfolio was also subject to interest rate risk. Changes in interest rates of 100-basis points would have resulted in market value changes of $13.5 million.

Market Risk and Market Interest Risk

In March 2013, we issued at par value $1.15 billion of 0.25% convertible senior notes (the “Notes”). Holders of the Notes may convert the Notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, we would pay the holder an amount of cash equal to the principal amounts of the Notes. The amounts in excess of the principal amounts, if any, may be paid in cash or stock at our option. Concurrent with the issuance of the Notes, we entered into separate note hedging

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transactions and the sale of warrants. These separate transactions were completed to reduce the potential economic dilution from the conversion of the Notes.

The Notes have a fixed annual interest rate of 0.25%, and therefore we do not have economic interest rate exposure on the Notes. However, the value of the Notes are exposed to interest rate risk. Generally, the fair values of our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of our 0.25% Notes is affected by our stock price. The principal balance of our Notes was $1.15 billion as of April 30, 2015. The total estimated fair value of our Notes at April 30, 2015 was $1.4 billion. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the first quarter of fiscal 2016, which was $125.10.

In October 2014, we entered into a credit agreement (the “Credit Agreement”) which provides for a $650.0 million unsecured revolving credit facility that matures in October 2019 (the “Credit Facility”). Borrowings under the Credit Facility bear interest, at our option, at either a base rate formula, as defined in the Credit Agreement, or a LIBOR based formula, each as set forth in the Credit Agreement. Additionally, we are obligated to pay an ongoing commitment fee at a rate between 0.125% and 0.25%. Interest and the commitment fees are payable in arrears quarterly. As of April 30, 2015 there was no outstanding borrowing amount under the Credit Agreement.

In February 2015, we assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan requires interest only payments with the remaining principal due at maturity. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that we were in compliance with as of April 30, 2015.

We deposit our cash with multiple financial institutions. Our deposits, at times, may exceed federally insured limits.

The bank counterparties to the derivative contracts potentially expose us to credit-related losses in the event of their nonperformance. To mitigate that risk, we only contract with counterparties who meet the minimum requirements under our counterparty risk assessment process. We monitor ratings, credit spreads and potential downgrades on at least a quarterly basis. Based on our on-going assessment of counterparty risk, we adjust our exposure to various counterparties. We generally enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty.  However, we do not have any master netting arrangements in place with collateral features.

We have an investment portfolio that includes strategic investments in public and privately-held companies, many of which are in the development stage. When our ownership interests are less than 20 percent and we do not have the ability to exert significant influence, we account for investments in non-marketable equity and debt securities of the privately-held companies using the cost method of accounting. Otherwise, we account for the investments using the equity method of accounting.

Our portfolio consists of investments in over 130 privately-held companies, primarily comprised of independent software vendors and system integrators. We invest in early-to-late stage companies for strategic reasons and to support key business initiatives. Our investments in these companies range from $0.2 million to $50.0 million, with eight investments individually equal to or in excess of $10 million. As of April 30, 2015 and January 31, 2015 the carrying value of our investments in privately-held companies was $301.0 million and $158.0 million, respectively. The estimated fair value of our investments in privately-held companies was $452.0 million as of April 30, 2015. The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering or acquisition, or favorable terms reflecting appreciation to the cost of our initial investment. If we determine that any of our investments in such companies have experienced a decline in fair value, we may be required to record an impairment. All of our investments are subject to a risk of total loss of investment capital.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource

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constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

(b) Management’s Report on Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we are or may be involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, class actions, wage and hour, and other claims. We have been, and may in the future be, put on notice or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

During fiscal 2015, the Company received a communication from a large technology company alleging that the Company infringed certain of its patents.  The Company continues to analyze this claim.  No litigation has been filed to date.  There can be no assurance that this claim will not lead to litigation in the future.  The resolution of this claim is not expected to have a material adverse effect on the Company's financial condition, but it could be material to the net income or cash flows or both of a particular quarter. 

We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third party. In addition, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim.

The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims and other lawsuits, and the disposition of such claims and lawsuits, whether through settlement or litigation, could be time-consuming and expensive to resolve, divert our attention from executing our business plan, result in efforts to enjoin our activities, lead to attempts by third parties to seek similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements.

In general, the resolution of a legal matter could prevent us from offering our service to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results.

We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of all current matters is not expected to have a material adverse impact on our condensed consolidated results of operations, cash flows or financial position. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect our future results of operations or cash flows, or both, of a particular quarter.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations, cash flows and financial condition.

Risks Related to Our Business and Industry

Defects or disruptions in our services could diminish demand for our services and subject us to substantial liability.

Because our services are complex and incorporate a variety of hardware and proprietary and third-party software, our services may have errors or defects that could result in unanticipated downtime for our subscribers and harm to our reputation and our business. Cloud services frequently contain undetected errors when first introduced or when new versions or enhancements are released. We have from time to time found defects in our services and new errors in our services may be detected in the future. In addition, our customers may use our services in unanticipated ways that may cause a disruption in services for other customers attempting to access their data. As we acquire companies, we may encounter difficulty in incorporating the acquired technologies into our services and maintaining the quality standards that are consistent with our brand and reputation. Since our customers use our services for important aspects of their business, any errors, defects, disruptions in service or other performance problems could hurt our reputation and may damage our customers’ businesses. As a result, customers could elect to not renew our services or delay or withhold payment to us. We could also lose future sales or customers may make warranty or other claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.

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Interruptions or delays in services from our third-party data center hosting facilities or cloud computing platform providers could impair the delivery of our services and harm our business.

We currently serve our customers from third-party data center hosting facilities and cloud computing platform providers located in the United States and other countries. Any damage to, or failure of, our systems generally could result in interruptions in our services. Interruptions in our services may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenue. Our business would also be harmed if our customers and potential customers believe our services are unreliable.

As part of our current disaster recovery arrangements, our production environment and all of our customers’ data is currently replicated in near real-time in a facility located in the United States. Companies and products added through acquisition may be served through alternate facilities. We do not control the operation of any of these facilities, and they may be vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our services. Even with disaster recovery arrangements, our services could be interrupted.

As we continue to add data centers and add capacity in our existing data centers, we may move or transfer our data and our customers’ data. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of our services, which may damage our business.

If our security measures or those of our third-party data center hosting facilities, cloud computing platform providers, or third-party service partners, are breached, and unauthorized access is obtained to a customer’s data, our data or our IT systems, our services may be perceived as not being secure, customers may curtail or stop using our services, and we may incur significant legal and financial exposure and liabilities.

Our services involve the storage and transmission of customers’ proprietary information, and security breaches could expose us to a risk of loss of this information, litigation and possible liability. While we have security measures in place, they may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our IT data, our customers’ data or our data, including our intellectual property and other confidential business information. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers’ data, our data or our IT systems. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, our customers may authorize third-party technology providers to access their customer data, and some of our customers may not have adequate security measures in place to protect their data that is stored on our services. Because we do not control our customers or third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the integrity or security of such transmissions or processing. Malicious third parties may also conduct attacks designed to temporarily deny customers access to our services. Any security breach could result in a loss of confidence in the security of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability.

As we acquire and invest in companies or technologies, we may not realize the expected business or financial benefits and the acquisitions could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results and the market value of our common stock.

As part of our business strategy, we periodically make investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to make such investments and acquisitions in the future. Acquisitions and investments involve numerous risks, including:

•potential failure to achieve the expected benefits of the combination or acquisition;

•difficulties in, and the cost of, integrating operations, technologies, services and personnel;

•diversion of financial and managerial resources from existing operations;

• the potential entry into new markets in which we have little or no experience or where competitors may have stronger market positions;

• potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers;

• potential loss of key employees of the acquired company;

• inability to generate sufficient revenue to offset acquisition or investment costs;

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• inability to maintain relationships with customers and partners of the acquired business;

• difficulty of transitioning the acquired technology onto our existing platforms and maintaining the security standards for such technology consistent with our other services;

• potential unknown liabilities associated with the acquired businesses;

• unanticipated expenses related to acquired technology and its integration into our existing technology;

• negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue and unbilled deferred revenue;

• delays in customer purchases due to uncertainty related to any acquisition;

• the need to implement controls, procedures and policies at the acquired company;

• challenges caused by distance, language and cultural differences;

• in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries; and

• the tax effects of any such acquisitions.

Any of these risks could harm our business. In addition, if we finance acquisitions by issuing equity or convertible or other debt securities or loans, our existing stockholders may be diluted, or we could face constraints related to the terms of and repayment obligation related to the incurrence of indebtedness that could affect the market price of our common stock.

Privacy concerns and laws, evolving regulation of cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations may limit the use and adoption of our services and adversely affect our business.

Regulation related to the provision of services on the Internet is increasing, as federal, state and foreign governments continue to adopt new laws and regulations addressing data privacy and the collection, processing, storage and use of personal information. In some cases, foreign data privacy laws and regulations, such as the European Union’s Data Protection Directive, and the country-specific regulations that implement that directive, also govern the processing of personal information. Further, laws are increasingly aimed at the use of personal information for marketing purposes, such as the European Union’s e-Privacy Directive, and the country-specific regulations that implement that directive. Such laws and regulations are subject to differing interpretations and may be inconsistent among jurisdictions. These and other requirements could reduce demand for our services or restrict our ability to store and process data or, in some cases, impact our ability to offer our services in certain locations or our customers' ability to deploy our solutions globally.

In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on us. Our customers expect us to meet voluntary certification or other standards established by third parties, such as TRUSTe. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.

The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our services and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance.

Furthermore, concerns regarding data privacy may cause our customers’ customers to resist providing the data necessary to allow our customers to use our services effectively. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions.

Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.

Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare and telecommunications. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect, such as an attestation of compliance with the

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Payment Card Industry (PCI) Data Security Standards, may have an adverse impact on our business. Further, there are various statutes and regulations relevant to the direct email marketing and text-messaging industries, including the Telephone Consumer Protection Act (TCPA).  The interpretation of many of these statutes and regulations is evolving in the courts and administrative agencies and an inability to comply with them may have an adverse impact on our business. If in the future we are unable to achieve or maintain these industry-specific certifications or other requirements or standards relevant to our customers, it may harm our business.

In some cases, industry-specific laws, regulations or interpretive positions may also apply directly to us as a service provider. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.

If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with our revenue forecasts, our results could be harmed.

Due to the pace of change and innovation in enterprise cloud computing services and the unpredictability of future general economic and financial market conditions and the impact of foreign currency exchange rate fluctuations, we may not be able to accurately forecast our rate of growth. We plan our expense levels and investment on estimates of future revenue and future anticipated rate of growth. We may not be able to adjust our spending appropriately if the addition of new subscriptions or the renewals of existing subscriptions fall short of our expectations. A portion of our expenses may also be fixed in nature for some minimum amount of time, such as with a data center contract or office lease, so it may not be possible to reduce costs in a timely manner or without the payment of fees to exit certain obligations early. As a result, we expect that our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis. Our recent revenue growth rates may not be sustainable and may decline in the future. We believe that historical period-to-period comparisons of our revenues, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance.

We rely on third-party computer hardware, software and cloud computing platforms that could cause errors in, or failures of, our services and may be difficult to replace.

We rely on computer hardware purchased or leased from, software licensed from, and cloud computing platforms provided by, third parties in order to offer our services, including database software and hardware from a variety of vendors. Any errors or defects in third-party hardware, software or cloud computing platforms could result in errors in, or a failure of, our services, which could harm our business. These hardware, software and cloud computing platforms may not continue to be available at reasonable prices, on commercially reasonable terms or at all. Any loss of the right to use any of these hardware, software or cloud computing platforms could significantly increase our expenses and otherwise result in delays in the provisioning of our services until equivalent technology is either developed by us, or, if available, is identified, obtained through purchase or license and integrated into our services.

The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.

The market for enterprise applications and platform services is highly competitive, rapidly evolving and fragmented, and subject to changing technology, shifting customer needs and frequent introductions of new products and services. We compete primarily with vendors of packaged CRM software and companies offering on-demand CRM applications. We also compete with internally developed applications and face competition from enterprise software vendors and online service providers who may develop toolsets and products that allow customers to build new applications that run on the customers’ current infrastructure or as hosted services. Our current competitors include:

• on premise offerings from enterprise software application vendors;

• cloud computing application service providers;

• software companies that provide their product or service free of charge, and only charge a premium for advanced features and functionality;

• social media companies;

• traditional platform development environment companies;

• cloud computing development platform companies; and

• internally developed applications (by our potential customers' IT departments).

Many of our current and potential competitors enjoy substantial competitive advantages, such as greater name recognition, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. In addition, many of our current and potential competitors have established marketing relationships and access to larger customer bases, and have major distribution agreements with consultants, system integrators and resellers. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. Furthermore, because of these advantages, even if our services are more

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effective than the products and services that our competitors offer, potential customers might select competitive products and services in lieu of purchasing our services. For all of these reasons, we may not be able to compete successfully against our current and future competitors.

Our quarterly results are likely to fluctuate and our stock price and the value of our common stock could decline substantially.

Our quarterly 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. As a result, our fiscal first quarter has become our largest collections and operating cash flow quarter.

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 attrition rates for our services;

• the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;

• changes in deferred revenue and unbilled deferred revenue balances, which are not reflected in the balance sheet, due to seasonality, the compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter and fluctuations due to foreign currency movements;

• changes in foreign currency exchange rates;

• 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 services;

• the costs associated with acquiring new businesses and technologies and the follow-on costs of integration and consolidating the results of acquired businesses;

• the rate of expansion and productivity of our sales force;

• the length of the sales cycle for our services;

• new product and service introductions by our competitors;

• our success in selling our services to large enterprises;

• variations in the revenue mix of editions of our services;

• technical difficulties or interruptions in our services;

• expenses related to our real estate, our office leases and our data center capacity and expansion;

• changes in interest rates and our mix of investments, which would impact the return on our investments in cash and marketable securities;

• conditions, particularly sudden changes, in the financial markets, which have impacted and may continue to impact the value of and liquidity of our investment portfolio;

• income tax effects;

• our ability to realize benefits from strategic partnerships, acquisition or investments;

• other than temporary impairments in the value of our strategic investments in early-to-late stage privately held companies

• expenses related to significant, unusual or discrete events, which are recorded in the period in which the events occur;

• general economic conditions, which may adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay a prospective customer's purchasing decision, reduce the value of new subscription contracts, or affect attrition rates;

• timing of additional investments in our enterprise cloud computing application and platform services and in our consulting services;

• regulatory compliance costs;

• the timing of customer payments and payment defaults by customers;

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• extraordinary expenses such as litigation or other dispute-related settlement payments;

• the impact of new accounting pronouncements;

• equity issuances, including as consideration in acquisitions or due to the conversion of our outstanding convertible notes at the election of the note holders;

• the timing of stock awards to employees and the related adverse financial statement impact of having to expense those stock awards on a straight-line basis over their vesting schedules;

• the timing of commission, bonus, and other compensation payments to employees; and

• the timing of payroll and other withholding tax expenses, which are triggered by the payment of bonuses and when employees exercise their vested stock awards.

Many of these factors are outside of our control, and the occurrence of one or more of them might cause our operating results to vary widely. As such, we believe that historical quarter-to-quarter comparisons of our revenues, operating results, changes in our deferred revenue and unbilled deferred revenue balances and cash flows may not be meaningful and should not be relied upon as an indication of future performance.

Additionally, if we fail to meet or exceed the expectations of securities analysts and investors, or if one or more of the securities analysts who cover us adversely change their recommendation regarding our stock, the market price of our common stock could decline. Moreover, our stock price may be based on expectations, estimates and forecasts of our future performance that may be unrealistic or that may not be met. Further, our stock price may fluctuate based on reporting by the financial media, including television, radio and press reports and blogs.

Our efforts to expand our services beyond the CRM market and to develop our existing services in order to keep pace with technological developments may not succeed and may reduce our revenue growth rate and harm our business.

We derive substantially all of our revenue from subscriptions to our CRM enterprise cloud computing application services, and we expect this will continue for the foreseeable future. The markets for our Analytics Cloud and Communities Cloud remain relatively new and it is uncertain whether our efforts will ever result in significant revenue for us. Further, the introduction of new services beyond the CRM market may not be successful, and early stage interest and adoption of such new services may not result in long term success or significant revenue for us. Our efforts to expand our services beyond the CRM market may not succeed and may reduce our revenue growth rate.

Additionally, if we are unable to develop enhancements to and new features for our existing or new services that keep pace with rapid technological developments, our business will be harmed. The success of enhancements, new features and services depends on several factors, including the timely completion, introduction and market acceptance of the feature, service or enhancement. Failure in this regard may significantly impair our revenue growth. In addition, because our services are designed to operate on a variety of network hardware and software platforms using a standard browser, we will need to continuously modify and enhance our services to keep pace with changes in Internet-related hardware, software, communication, browser and database technologies. We may not be successful in either developing these modifications and enhancements or in bringing them to market timely. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase our research and development or service delivery expenses. Any failure of our services to operate effectively with future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and harm our business.

Sales to customers outside the United States expose us to risks inherent in international sales.

We sell our services throughout the world and are subject to risks and challenges associated with international business. Historically, sales in Europe and Asia Pacific together have represented approximately 30 percent of our total revenues, and we intend to continue to expand our international sales efforts. The risks and challenges associated with sales to customers outside the United States include:

• localization of our services, including translation into foreign languages and associated expenses;

• laws and business practices favoring local competitors;

• pressure on the creditworthiness of sovereign nations, particularly in Europe, where we have customers and a balance of our cash, cash equivalents and marketable securities;

• liquidity issues or political actions by sovereign nations, which could result in decreased values of these balances;

• foreign currency fluctuations and controls;

• compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy, anti-corruption, import/export, antitrust, data protection and industry-specific laws and regulations, including rules related to compliance by our third-party resellers;

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• regional data privacy laws and other regulatory requirements that apply to outsourced service providers and to the transmission of our customers’ data across international borders;

• treatment of revenue from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding income or other taxes in foreign jurisdictions;

• different pricing environments;

• difficulties in staffing and managing foreign operations;

• different or lesser protection of our intellectual property;

• longer accounts receivable payment cycles and other collection difficulties;

• natural disasters, acts of war, terrorism, pandemics or security breaches; and

• regional economic and political conditions.

Any of these factors could negatively impact our business and results of operations.

Additionally, our international subscription fees are paid either in U.S. dollars or local currency. As a result, fluctuations in the value of the U.S. dollar and foreign currencies may make our services more expensive for international customers, which could harm our business.

Because we recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.

We generally recognize revenue from customers ratably over the terms of their subscription agreements, which are typically 12 to 36 months. As a result, most of the revenue we report in each quarter is the result of subscription agreements entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any one quarter may not be reflected in our revenue results for that quarter. Any such decline, however, will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our services, and potential changes in our attrition rate, may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term.

If our customers do not renew their subscriptions for our services or reduce the number of paying subscriptions at the time of renewal, our revenue will decline and our business will suffer. If we cannot accurately predict subscription renewals or upgrade rates, we may not meet our revenue targets which may adversely affect the market price of our common stock.

Our customers have no obligation to renew their subscriptions for our services after the expiration of their initial subscription period, which is typically 12 to 36 months, and in the normal course of business, some customers have elected not to renew. In addition, our customers may renew for fewer subscriptions, renew for shorter contract lengths, or switch to lower cost offerings of our services. We cannot accurately predict attrition rates given our varied customer base of enterprise and small and medium size business customers and the number of multi-year subscription contracts. Our attrition rates may increase or fluctuate as a result of a number of factors, including customer dissatisfaction with our services, customers’ spending levels, decreases in the number of users at our customers, pricing changes and deteriorating general economic conditions.

Our future success also depends in part on our ability to sell additional features and services, more subscriptions or enhanced editions of our services to our current customers. This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and that our customers do not react negatively to any price changes related to these additional features and services. If our efforts to upsell to our customers are not successful our business may suffer.

If the market for our technology delivery model and enterprise cloud computing services develops more slowly than we expect, our business could be harmed.

Our success depends on the willingness of third-party developers to build applications that are complementary to our services. Without the development of these applications, both current and potential customers may not find our services sufficiently attractive. In addition, for those customers who authorize a third-party technology partner access to their data, we do not provide any warranty related to the functionality, security and integrity of the data transmission or processing. Despite contract provisions to protect us, customers may look to us to support and provide warranties for the third-party applications, which may expose us to potential claims, liabilities and obligations for applications we did not develop or sell, all of which could harm our business.

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We are subject to risks associated with our venture capital investments.

We invest in early-to-late stage companies for strategic reasons and to support key business initiatives, and may not realize a return on our investments. Many such companies generate net losses and the market for their products, services or technologies may be slow to develop, and, therefore, are dependent on the availability of later rounds of financing from banks or investors on favorable terms to continue their operations.  The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering or acquisition, on favorable terms reflecting appreciation to the cost of our initial investment.  The capital markets for public offerings and acquisitions are dynamic and the likelihood of liquidity events for the companies we have invested in could significantly worsen. Further, valuations of privately-held companies are inherently complex due to the lack of readily available market data. If we determine that any of our investments in such companies have experienced a decline in fair value, we may be required to record an impairment, which could negatively impact our financial results. All of our investments are subject to a risk of total loss of investment capital.

Supporting our existing and growing customer base could strain our personnel resources and infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.

We continue to experience significant growth in our customer base and personnel, which has placed a strain on our management, administrative, operational and financial infrastructure. We anticipate that additional investments in our internal infrastructure, data center capacity, research, customer support and development, and real estate spending will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth. If we fail to successfully scale our operations and increase productivity, we will be unable to execute our business plan.

We regularly upgrade or replace our various software systems. If the implementations of these new applications are delayed, or if we encounter unforeseen problems with our new systems or in migrating away from our existing applications and systems, our operations and our ability to manage our business could be negatively impacted.

Our success will depend in part upon the ability of our senior management to manage our projected growth effectively. To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed. To manage the expected domestic and international growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls, our reporting systems and procedures, and our utilization of real estate. The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term.

As more of our sales efforts are targeted at larger enterprise customers, our sales cycle may become more time-consuming and expensive, we may encounter pricing pressure and implementation and customization challenges, and we may have to delay revenue recognition for some complex transactions, all of which could harm our business and operating results.

As we target more of our sales efforts at larger enterprise customers, we may face greater costs, longer sales cycles, greater competition and less predictability in completing some of our sales. In this market segment, the customer’s decision to use our services may be an enterprise-wide decision and, if so, these types of sales would require us to provide greater levels of education regarding the use and benefits of our services, as well as education regarding privacy and data protection laws and regulations to prospective customers with international operations. In addition, larger customers may demand more customization, integration services and features. As a result of these factors, these sales opportunities may require us to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting our own sales and professional services resources to a smaller number of larger transactions, while potentially requiring us to delay revenue recognition on some of these transactions until the technical or implementation requirements have been met.

Pricing and packaging strategies for enterprise and other customers for subscriptions to our existing and future service offerings may not be widely accepted by other new or existing customers. Our adoption of such new pricing and packaging strategies may harm our business.

For large enterprise customers, professional services may also be performed by a third party or a combination of our own staff and a third party. Our strategy is to work with third parties to increase the breadth of capability and depth of capacity for delivery of these services to our customers. If a customer is not satisfied with the quality of work performed by us or a third party or with the type of services or solutions delivered, then we could incur additional costs to address the situation, the profitability of that work might be impaired, and the customer’s dissatisfaction with our services could damage our ability to obtain additional work from that customer. In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.

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We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights.

We are involved in various legal matters arising from the normal course of business activities. These may include claims, suits, government investigations and other proceedings involving alleged infringement of third-party patents and other intellectual property rights, and commercial, corporate and securities, labor and employment, wage and hour, and other matters.

The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We have received in the past and may receive in the future communications from third parties, including practicing entities and non-practicing entities, claiming that we have infringed their intellectual property rights.

In addition, we have been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights. For example, during fiscal 2015, we received a communication from a large technology company alleging that we infringed certain of its patents. While we continue to analyze this claim and no litigation has been filed to date, there can be no assurance that this claim will not lead to litigation in the future. Our technologies may be subject to injunction if they are found to infringe the rights of a third party or we may be required to pay damages, or both. Further, 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.

The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, whether through settlement or licensing discussions, or litigation, could be time-consuming and expensive to resolve, divert management attention from executing our business plan, result in efforts to enjoin our activities, lead to attempts on the part of other parties to pursue similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements.

Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results. In addition, depending on the nature and timing of any such dispute, an unfavorable resolution of a legal matter could materially affect our future results of operations or cash flows or both of a particular quarter.

In addition, our exposure to risks associated with various claims, including the use of intellectual property, may be increased as a result of acquisitions of other companies. For example, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard against infringement risks with respect to the acquired company or technology. In addition, third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.

If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, and our business may be harmed. In addition, defending our intellectual property rights may entail significant expense. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have some U.S. patents and many U.S. and international patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of protection for some intellectual property rights in the U.S. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our services are available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. Also, our involvement in standard setting activity or the need to obtain licenses from others may require us to license our intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties from using our intellectual property.

We may be required to spend significant resources to monitor and protect our intellectual property rights and we may conclude that in at least some instances the benefits of protecting our intellectual property rights may be outweighed by the expense. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.

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Our continued success depends on our ability to maintain and enhance our brands.

We believe that the brand identities we have developed have significantly contributed to the success of our business. Maintaining and enhancing the Salesforce brand and our other brands are critical to expanding our base of customers, partners and employees. Our brand strength will depend largely on our ability to remain a technology leader and continue to provide high-quality innovative products, services, and features. In order to maintain and enhance our brands, we may be required to make substantial investments that may later prove to be unsuccessful. If we fail to maintain and enhance our brands, or if we incur excessive expenses in our efforts to do so, our business, operating results and financial condition may be materially and adversely affected.

We may lose key members of our management team or development and operations personnel, and may be unable to attract and retain employees we need to support our operations and growth.

Our success depends substantially upon the continued services of our executive officers and other key members of management, particularly our Chief Executive Officer. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives. Such changes in our executive management team may be disruptive to our business. We are also substantially dependent on the continued service of our existing development and operations personnel because of the complexity of our services and technologies. We do not have employment agreements with any of our executive officers, key management, development or operations personnel and they could terminate their employment with us at any time. The loss of one or more of our key employees or groups could seriously harm our business.

In the technology industry, there is substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services, as well as competition for sales executives and operations personnel. We may not be successful in attracting and retaining qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.

Any failure in our delivery of high-quality technical support services may adversely affect our relationships with our customers and our financial results.

Our customers depend on our support organization to resolve technical issues relating to our applications. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. Increased customer demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our applications and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our enterprise cloud computing solutions to existing and prospective customers, and our business, operating results and financial position.

Periodic changes to our sales organization can be disruptive and may reduce our rate of growth.

We periodically change and make adjustments to our sales organization in response to market opportunities, competitive threats, management changes, product introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels and other internal and external considerations. Any such future sales organization changes may result in a temporary reduction of productivity, which could negatively affect our rate of growth. In addition, any significant change to the way we structure our compensation of our sales organization may be disruptive and may affect our revenue growth.

Unanticipated changes in our effective tax rate and additional tax liabilities may impact our operating results

We are subject to income taxes in the United States and various jurisdictions outside of the United States. Our effective tax rate could fluctuate due to changes in the mix of earnings and losses in countries with differing statutory tax rates. Our tax expense could also be impacted by changes in non-deductible expenses, changes in excess tax benefits related to exercises and vesting of stock-based expense, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them and the applicability of withholding taxes.

We are subject to tax examinations in multiple jurisdictions. While we regularly evaluate new information that may change our judgment resulting in recognition, derecognition or change in measurement of a tax position taken, there can be no assurance that the final determination of any examinations will not have an adverse effect on our operating results and financial position.

Our tax provision could also be impacted by changes in federal, state or international tax laws including fundamental tax law changes applicable to corporate multinationals currently being considered by many countries including the United States as well as several European countries.

Additionally, we may be subject to additional tax liabilities due to changes in non-income taxes resulting from changes in federal, state or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, changes to the

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business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period.

Our debt service obligations and operating lease commitments may adversely affect our financial condition and cash flows from operations.

We have a high level of debt, including our 0.25% Senior Notes due April 1, 2018 and capital lease arrangements. Additionally, we have significant contractual commitments in operating lease arrangements, which are not reflected on our condensed consolidated balance sheets. In addition, we have a financing obligation for a leased facility of which we are deemed the owner for accounting purposes. Our maintenance of this indebtedness could:

• impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;

• cause us to dedicate a substantial portion of our cash flows from operations towards debt service obligations and principal repayments;

• make us more vulnerable to downturns in our business, our industry or the economy in general; and

• due to limitations within the revolving credit facility covenants, restrict our ability to incur additional indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, as defined in the credit agreement.

Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions and governmental regulations. Further, our operations may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on our debt, we could be in default on such debt. If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we would be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

A failure to comply with the covenants and other provisions of our outstanding debt could result in events of default under such instruments, which could permit acceleration of all of our notes and borrowings under our revolving credit facility. Any required repayment of our notes or revolving credit facility as a result of a fundamental change or other acceleration would lower our current cash on hand such that we would not have those funds available for use in our business.

Weakened global economic conditions may adversely affect our industry, business and results of operations.

Our overall performance depends in part on worldwide economic conditions. The United States and other key international economies have experienced cyclical downturns from time to time in which economic activity was impacted 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. 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 attrition rates, all of which could adversely affect our operating results.

Natural disasters and other events beyond our control could materially adversely affect us.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers, and could decrease demand for our services. The majority of our research and development activities, corporate headquarters, information technology systems, and other critical business operations, are located near major seismic faults in the San Francisco Bay Area. Because we do not carry earthquake insurance for direct quake-related losses, with the exception of the building that we own in San Francisco, and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected in the event of a major earthquake or catastrophic event.

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Risks Relating to Our Convertible Senior Notes and Our Common Stock

The market price of our common stock is likely to be volatile and could subject us to litigation.

The trading prices of the securities of technology companies have been highly volatile. Accordingly, the market price of our notes and common stock has been and is likely to continue to be subject to wide fluctuations. Factors affecting the market price of our notes and common stock include:

• variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue and other financial metrics and non-financial metrics, and how those results compare to analyst expectations;

• forward-looking guidance to industry and financial analysts related to future revenue and earnings per share;

• changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;

• announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;

• announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;

• announcements of customer additions and customer cancellations or delays in customer purchases;

• recruitment or departure of key personnel;

• disruptions in our service due to computer hardware, software, network or data center problems;

• the economy as a whole, market conditions in our industry and the industries of our customers;

• trading activity by a limited number of stockholders who together beneficially own a significant portion of our outstanding common stock;

• the issuance of shares of common stock by us, whether in connection with an acquisition, a capital raising transaction or upon conversion of some or all of our outstanding convertible senior notes; and

• issuance of debt or other convertible securities.

In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our notes and common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price of our notes and common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, it could result in substantial costs and a diversion of management’s attention and resources.

We may issue additional shares of our common stock or instruments convertible into shares of our common stock, including in connection with the conversion of the notes, and thereby materially and adversely affect the market price of our common stock and the trading price of the notes.

We are not restricted from issuing additional shares of our common stock or other instruments convertible into, or exchangeable or exercisable for, shares of our common stock during the life of the notes. If we issue additional shares of our common stock or instruments convertible into shares of our common stock, it may materially and adversely affect the market price of our common stock and, in turn, the trading price of the notes. In addition, the conversion of some or all of the notes may dilute the ownership interests of existing holders of our common stock, and any sales in the public market of any shares of our common stock issuable upon such conversion of the notes could adversely affect the prevailing market price of our common stock. In addition, the potential conversion of the notes could depress the market price of our common stock.

We may not have the ability to raise the funds necessary to pay the amount of cash due upon conversion of the notes or the fundamental change purchase price due when a holder submits its notes for purchase upon the occurrence of a fundamental change.

Upon the occurrence of a fundamental change, holders of the notes may require us to purchase, for cash, all or a portion of their notes. In addition, if a holder converts its notes, we will generally pay such holder an amount of cash before delivering to such holder any shares of our common stock.

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There can be no assurance that we will have sufficient financial resources, or will be able to arrange financing, to pay the fundamental change purchase price if holders submit their notes for purchase by us upon the occurrence of a fundamental change or to pay the amount of cash due if holders surrender their notes for conversion. In addition, agreements governing any future debt may restrict our ability to make each of the required cash payments even if we have sufficient funds to make them. Furthermore, our ability to purchase the notes or to pay cash upon the conversion of the notes may be limited by law or regulatory authority. If we fail to purchase the notes, to pay interest due on, or to pay the amount of cash due upon conversion, we will be in default under the indenture, which in turn may result in the acceleration of other indebtedness we may then have. If the repayment of the other indebtedness were to be accelerated, we may not have sufficient funds to repay that indebtedness and to purchase the notes or to pay the amount of cash due upon conversion. Our inability to pay for the notes that are tendered for purchase or upon conversion could result in note holders receiving substantially less than the principal amount of the notes, which could harm our reputation, financing opportunities and our business.

The fundamental change provisions may delay or prevent an otherwise beneficial takeover attempt of us.

The fundamental change purchase rights will allow holders of the notes to require us to purchase all or a portion of their notes upon the occurrence of a fundamental change. The provisions requiring an increase to the conversion rate for conversions in connection with a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us and the removal of incumbent management that might otherwise be beneficial to investors.

The convertible note hedges and warrant transactions may affect the trading price of the notes and the market price of our common stock.

We entered into privately negotiated convertible note hedge transactions with certain hedge counterparties concurrently with the pricing of the notes. We also entered into privately negotiated warrant transactions with the hedge counterparties. Taken together, the convertible note hedge transactions and the warrant transactions are expected, but not guaranteed, to reduce the potential dilution with respect to our common stock upon conversion of the notes. If, however, the price of our common stock, as measured under the terms of the warrant transactions, exceeds the exercise price of the warrant transactions, the warrant transactions will have a dilutive effect on our earnings per share to the extent that the price of our common stock as measured under the warrant transactions exceeds the strike price of the warrant transactions.

The hedge counterparties and their respective affiliates periodically modify their hedge positions from time to time following the pricing of the notes (and are particularly likely to do so during any observation period relating to a conversion of the notes) by entering into or unwinding various over-the-counter derivative transactions with respect to our common stock, or by purchasing or selling shares of our common stock or the notes in privately negotiated transactions or open market transactions. The effect, if any, of these transactions and activities on the market price of our common stock or the trading price of the notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities, however, could adversely affect the market price of our common stock and the trading price of the notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the notes or our common stock. In addition, we do not make any representation that the counterparties to those transactions will engage in these transactions or activities or that these transactions and activities, once commenced, will not be discontinued without notice; the counterparties or their affiliates may choose to engage in, or discontinue engaging in, any of these transactions or activities with or without notice at any time, and their decisions will be in their sole discretion and not within our control.

We are subject to counterparty risk with respect to the convertible note hedge transactions.

The hedge counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that these hedge counterparties may default under the convertible note hedge transactions. Our exposure to the credit risk of the hedge counterparties will not be secured by any collateral. If one or more of the hedge counterparties to one or more of our convertible note hedge transactions becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under those transactions. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in our stock price and the volatility of our stock. In addition, upon a default by one of the hedge counterparties, we may suffer adverse tax consequences and dilution with respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the hedge counterparties.

Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the market price of our common stock.

Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the market price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions among other things:

• permit the board of directors to establish the number of directors;

70

• provide that directors may only be removed “for cause” and only with the approval of holders of 66 2/3 percent of our outstanding capital stock;

• require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws;

• authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”);

• prohibit the ability of our stockholders to call special meetings of stockholders;

• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

• provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and

• establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15 percent or more of our common stock.

In addition, the fundamental change purchase rights applicable to the notes, which will allow note holders to require us to purchase all or a portion of their notes upon the occurrence of a fundamental change, and the provisions requiring an increase to the conversion rate for conversions in connection with a make-whole fundamental change may in certain circumstances delay or prevent a takeover of us and the removal of incumbent management that might otherwise be beneficial to investors.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 1, 2015, the Company issued 24,144 shares of Company common stock in connection with the acquisition of a contextual multifactor authentication company, in a private transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) under Securities Act.

The following table sets forth the purchases of the Company’s securities by the Company and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) (17 CFR 240.10b-18(a)(3)) during the first quarter of fiscal year 2016.

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
February 1 to 28, 2015	0	$	0	0	0
March 1 to 31, 2015	0	$	0	0	0
April 1 to 30, 2015	53,263	$	4.62	0	0
Total	53,263	$	4.62	0

____________________

(1) All of the shares purchased in April 2015 were repurchased from former employees of RelateIQ, Inc. (“RelateIQ”) upon their termination of employment with the Company. The shares were originally acquired by the employees upon early exercise of RelateIQ stock options and were held subject to a right of repurchase in favor of the issuer until the satisfaction of certain vesting requirements. The RelateIQ shares resulting from these early exercises were converted into shares of Company common stock upon the Company’s acquisition of RelateIQ in August 2014 and were held subject to a right of repurchase in favor of the Company until the satisfaction of certain vesting requirements.

(2) The price paid per share was the original option exercise price per share paid by the former RelateIQ employees upon early exercise, as adjusted pursuant to the terms the agreement by which the Company acquired RelateIQ.

71

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

72

ITEM 6. EXHIBITS

Exhibits

The Exhibits listed below are filed as part of this Form 10-Q.

Index to Exhibits

Exhibit No.	Exhibit Description	Provided Herewith	Incorporated by Reference
			Form	SEC File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of salesforce.com, inc.		8-K	001-32224	3.1	06/11/2013
3.2	Amended and Restated Bylaws of salesforce.com, inc.		8-K	001-32224	3.2	06/11/2013
10.1	Services Agreement, dated March 31, 2015, between salesforce.com, inc. and Graham Smith	X
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Extension Definition
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

73

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 22, 2015
	salesforce.com, inc.
	By:	/S/    MARK J. HAWKINS
		Mark J. Hawkins
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: May 22, 2015
	salesforce.com, inc.
	By:	/S/    JOE ALLANSON
		Joe Allanson
		Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

74

EX-10.1

Exhibit 10.1

SERVICES AGREEMENT

This Services Agreement (“Agreement”) is made by and between Graham Smith (“Executive”) and salesforce.com, inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Executive had entered into a Transition Services Agreement with the Company dated February 27, 2014 (the “Transition Services Agreement”) relating to Executive’s transition services until his expected retirement date on March 31, 2015;

WHEREAS, Executive and Company both wish Executive to remain employed by the Company until such time as mutually agreed between Executive and the Chief Executive Officer of the Company (the “CEO”);

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:

COVENANTS

1.Position and Duties. Executive will not retire from his employment with the Company on March 31, 2015. Instead, Executive will remain employed with the Company and, as of the Effective Date, will serve as Executive Vice President of the Company. As Executive Vice President, Executive will act as an advisor to the CEO on projects as will be reasonably assigned to him by the CEO, including but not limited to work on behalf of the Company on matters relating to the Salesforce Foundation and Salesforce.org. Executive agrees to provide such services to the Company in good faith, to the best of his ability and in the best interests of the Company. The period of Executive’s employment under this Agreement is referred to herein as the “Employment Term.”

2. Compensation.

a.Base Salary. During the Employment Term, Executive shall continue to receive his base salary at the same rate that he was receiving his salary immediately prior to the Effective Date.

b.Bonuses.

i.Fiscal 2016 Bonus. Subject to Executive’s continued employment through the relevant payment dates, Executive will be entitled to receive 100% of his total target bonus opportunity for the 2016 fiscal year (ending January 31, 2016) under the Kokua Bonus Plan, which target bonus will equal 100% of Executive’s base salary(the “Fiscal 2016 Bonus”) with (1) 25% of his target bonus opportunity for the 2016 fiscal year paid on September 30, 2015, or such time during calendar year 2015 as the Company makes its first fiscal 2016 bonus installment payment to all of its similarly situated employees under the same bonus program, and(2)  the remaining 75% of his target bonus opportunity for the 2016 fiscal year paid in calendar year 2017 at the same time as the Company makes its second fiscal 2016 bonus installment payment to all of its similarly situated employees under the same bonus program. In each case, such bonus payments will be paid to Executive regardless of Executive’s or Company’s performance. Alternatively, and notwithstanding any terms of the Company’s bonus program to the contrary, if Executive’s employment terminates for any reason prior to the date that any Fiscal 2016 Bonus payment otherwise would have been due to Executive pursuant to this Section 2.b.i, then Executive will be entitled to receive a pro-rated Fiscal 2016 Bonus, with such pro-ration calculated based on the number of days Executive remained employed during the Company’s fiscal 2016 year and reduced for any portion of the Fiscal 2016 Bonus already paid to Executive. Subject to any delay required by Section 4, any such pro-rated bonus shall be made to Executive, less any applicable withholding, within 10 calendar days following Executive’s termination of employment, provided, however, that if the date of such termination occurs on or after November 1 of a calendar year, any bonus amount payable in connection with such termination under this paragraph will be paid in arrears on the first payroll date to occur during the immediately following calendar year. Except as provided herein, Executive’s bonus for fiscal 2016 will be governed by the terms and conditions of the Kokua Bonus Plan.

ii.Future Bonuses. For periods after fiscal 2016, during the Employment Term, Executive shall be eligible to participate in the bonus program then-available to similarly-situated executives on such terms and conditions as determined by the Company.

c.Benefits. During the Employment Term, Executive shall continue to be eligible to participate in then-available Company benefit programs at the same level as he would have been eligible to participate in such programs as of immediately prior to the Effective Date, subject to the terms and conditions, including eligibility requirements, of such programs. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

d.Equity. During the Employment Term, Executive will continue to vest in Executive’s outstanding Company stock options and restricted stock unit awards in accordance with their terms.

3.Impact on Other Arrangements.

a.Executive understands and agrees that this Agreement will supersede and replace the Transition Services Agreement in its entirety, and that, as of the Effective Date, the Transition Services Agreement will be of no force and effect and Executive will no longer be entitled to receive any consideration or benefits thereunder (other than with respect to amounts and benefits already earned). Executive further understands and agrees that Executive’s employment during the Employment Term shall continue to be “at-will,” meaning the Company and Executive are both free to terminate Executive’s employment with or without cause or notice. In addition, Executive understands and agrees that except as expressly provided for in this Agreement, Executive shall not be entitled to any other consideration or separation benefits, including, but not limited to, any severance payments, equity benefits, or other severance benefits provided for in the offer letter between Executive and the Company on August 8, 2007 (the “Offer Letter”), other than accrued but unpaid salary and bonus amounts and vested benefits.

b.Notwithstanding anything in this Agreement to the contrary, if, during the Employment Term, the Company completes a “Change of Control” (as defined in the Change of Control and Retention Agreement between the Company and Executive dated as of December 22, 2008 (the “Retention Agreement”)), Executive shall remain eligible to receive all benefits under his Retention Agreement in accordance with its terms, including but not limited to pursuant to Section 3 thereof; provided, however, that solely in the event Executive’s employment terminates for any reason prior to the date that any Fiscal 2016 Bonus payment otherwise would have been due to Executive, any such termination-related Fiscal 2016 Bonus payments provided under this Agreement will reduce the like-kind payments provided under the Retention Agreement, if any. For purposes of clarity, and notwithstanding anything in the Retention Agreement to the contrary, if no Change of Control occurs prior to Executive’s termination of employment with the Company, the Retention Agreement will, as of the date of such termination, be of no further force and effect, except with respect to Section 4 (“Golden Parachute Excise Tax Best Results”) of the Retention Agreement, which Section 4 shall remain in full force and effect, and Executive will not be entitled to receive any severance benefits, equity benefits or other benefits thereunder. For purposes of clarity, Section 4 of the Retention Agreement applies to payments under this Agreement.

4.Tax Consequences.

a.General. The Company makes no representations or warranties with respect to the tax consequences of the payments provided to Executive or made on his behalf under the terms of this Agreement. Executive agrees and understands that he is responsible for payment, if any, of personal local, personal state, and/or personal federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon. Executive further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Executive’s failure to pay or Executive’s delayed payment of Executive’s personal federal or personal state or local taxes, or (b) damages sustained by the Company by reason of any claims, specifically set forth in (a) above, including attorneys’ fees and costs.

b.Notwithstanding anything in this Agreement to the contrary, no severance payments or benefits that become payable under this Agreement will be paid to Executive until he has a “separation from service” within the meaning of Section 409A of the Code and the final treasury regulations (the “Treasury Regulations”) and official guidance thereunder (collectively, as each may be amended from time to time, “Section 409A”). References to Executive’s termination of employment or similar terms are intended to refer to Executive’s separation from service within the meaning of Section 409A. The Parties agree that they expect and intend that at all times during the Employment Term Executive’s duties shall constitute more than twenty-percent (20%) of the services provided by Executive to the Company, on average, during the 36 months of employment immediately preceding the Effective Date. Each payment and benefit payable under this Agreement is intended to

constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii). Payments under this Agreement are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to any additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to so comply or to otherwise be exempt from Section 409A. Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service, then any severance payments or separation benefits to the extent that the same constitute deferred compensation under Section 409A, otherwise due to Executive on or within the six (6) month period following Executive’s separation from service (whether under this Agreement or otherwise) will accrue during such six (6) month period and will become payable in a lump sum payment on the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following his separation from service but prior to the six (6) month anniversary of his date of separation from service, then any payments delayed in accordance with this section shall be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other payments and benefits shall be payable in accordance with the payment schedule applicable to each payment or benefit. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A. In no event will the Company reimburse Executive for any tax obligations arising under Section 409A.

5.Trade Secrets and Confidential Information/Company Property. Executive reaffirms and agrees to observe and abide by the terms of his Employee Inventions and Proprietary Rights Assignment Agreement(the “Confidentiality Agreement”) (except as provided herein), specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information. Executive agrees that upon the date of his termination of employment, he will return all documents and other items provided to Executive by the Company, developed or obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company.

6.ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, AND THEIR INTERPRETATION, SHALL BE SUBJECT TO ARBITRATION IN THE CITY AND COUNTY OF SAN FRANCISCO, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”). THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

7.Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Executive represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and

represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

8.No Representations. Executive represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Executive has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

9.Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

10.Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Executive concerning the subject matter of this Agreement and Executive’s employment with the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Executive’s relationship with the Company, with the exception of the Confidentiality Agreement, the equity plans and equity agreements under which Executive’s Company equity awards are granted, and the Retention Agreement, in each case as modified herein. For the sake of clarity, Executive specifically acknowledges that the Offer Letter’s provisions with respect to receipt of any severance payments or benefits in the event of his termination without cause or otherwise are expressly superseded by this Agreement and that the Executive shall receive no compensation or consideration of any sort under the Offer Letter, and that the Transition Services Agreement is superseded in full. Executive further acknowledges that if no Change of Control occurs prior to the date Executive’s employment with the Company terminates, the Retention Agreement will, as of the date of such termination, be of no further force and effect, except with respect to Section 4 (“Golden Parachute Excise Tax Best Results”) of the Retention Agreement, which Section 4 shall remain in full force and effect, and Executive will not be entitled to receive any severance benefits, equity benefits or other benefits thereunder.

11.No Oral Modification. This Agreement may only be amended in a writing signed by Executive and the Company’s Chief Legal Officer.

12.Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions. Executive consents to personal and exclusive jurisdiction and venue in the State of California.

13.Effective Date. This Agreement will become effective on the date it has been signed by both Parties (the “Effective Date”).

14.Counterparts. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

15.Legal Fees. The Company shall pay, or reimburse Executive for, Executive’s legal counsel’s reasonable fees in connection with the negotiation of this Agreement; provided, however, that Executive agrees to submit appropriate documentation to the Company reflecting such fees within forty-five (45) days following the date of this Agreement.

16.Voluntary Execution of Agreement. Executive understands and agrees that he executed this Agreement voluntarily, and without any duress or undue influence on the part or behalf of the Company or any third party. Executive acknowledges that: (a) he has read this Agreement; (b) he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice or has elected not to retain legal counsel; (c) he understands the terms and consequences of this Agreement; and (d) he is fully aware of the legal and binding effect of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

GRAHAM SMITH, an individual

Dated: March 31, 2015    /s/ Graham Smith

Graham Smith

SALESFORCE.COM, INC.

Dated: March 31, 2015    By /s/ Burke Norton

Burke Norton

Chief Legal Officer

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Marc Benioff, certify that:

1. I have reviewed this report on Form 10-Q of salesforce.com, inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

May 22, 2015	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark Hawkins, certify that:

1. I have reviewed this report on Form 10-Q of salesforce.com, inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

May 22, 2015	/s/ MARK J. HAWKINS
	Mark J. Hawkins
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on my knowledge, I, Marc Benioff, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of salesforce.com, inc. on Form 10-Q for the period ended April 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of salesforce.com, inc.

May 22, 2015	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

Based on my knowledge, I, Mark Hawkins, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of salesforce.com, inc. on Form 10-Q for the period ended April 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of salesforce.com, inc.

May 22, 2015	/s/ MARK HAWKINS
	Mark Hawkins
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

XML

Investments - Schedule of Outstanding Foreign Currency Derivative Contracts Related Primarily to Intercompany Receivables and Payables (Detail) (Derivatives not designated as hedging instruments, USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Derivative [Line Items]
Fair value of foreign currency derivative contracts	$ 6,884	$ 4,917
Foreign currency derivative contracts
Derivative [Line Items]
Notional amount of foreign currency derivative contracts	$ 731,148	$ 942,086

XML

Debt - Components of Warrants (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Apr. 30, 2015
Class of Warrant or Right [Line Items]
Warrants (in shares)	17,308,880
Convertible Debt | 0.25% Warrants
Class of Warrant or Right [Line Items]
Proceeds	$ 84,800
Warrants (in shares)	17,308,880
Strike Price (in dollars per share)	$ 90.40

XML

Business Combinations (Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Jan. 31, 2015
Goodwill [Roll Forward]
Goodwill beginning balance		$ 3,782,660
Goodwill ending balance	3,791,583	3,782,660
Other Business Combination
Goodwill [Roll Forward]
Goodwill acquired	$ 8,923

XML

Commitments - Additional Information (Detail) (USD $)	Apr. 30, 2015	Jan. 31, 2015
Other Commitments [Line Items]
Financing obligation, building in progress-leased facility	$ 145,255,000	$ 125,289,000
Total operating lease commitment balance	2,200,000,000
Letter of Credit
Other Commitments [Line Items]
Value of outstanding letters of credit	67,900,000
Facilities Space [Member]
Other Commitments [Line Items]
Total operating lease commitment balance	$ 1,900,000,000

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Debt - Schedule of Interest Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Debt Disclosure [Abstract]
Contractual interest expense	$ 3,350	$ 2,903
Amortization of debt issuance costs	1,018	1,228
Amortization of debt discount	6,059	10,984
Debt Instrument, Interest Expense, Total	$ 10,427	$ 15,115

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Business Combinations (Consideration Transferred) (Details) (50 Fremont Street, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Feb. 28, 2015
50 Fremont Street
Business Acquisition [Line Items]
Cash	$ 435,189
Loan assumed on 50 Fremont	200,000
Prorations due to ownership transfer midmonth	2,411
Consideration transferred	$ 637,600

XML

Summary of Business and Significant Accounting Policies - Schedule of Assumptions Used to Calculate Fair Value of Options Granted (Detail) (Stock Options, USD $)	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	37.40%	37.00%
Estimated life	3 years 6 months 20 days	3 years 5 months 20 days
Risk-free interest rate, minimum	1.13%	1.20%
Risk-free interest rate, maximum	1.36%	1.39%
Weighted-average fair value per share of grants (in dollars per share)	$ 19.52	$ 16.93

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Other Balance Sheet Accounts - Schedule of Capitalized Software Costs (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Property, Plant and Equipment [Line Items]
Capitalized software costs	$ 421,323	$ 433,398
Capitalized internal-use software development costs, net of accumulated amortization of $147,646 and $136,314, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	102,430	96,617
Accumulated amortization	147,646	136,314
Acquired developed technology, net of accumulated amortization of $414,634 and $392,736, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	318,893	336,781
Accumulated amortization	$ 414,634	$ 392,736

XML

Commitments - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating and Capital Leases (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Future minimum lease payments under non-cancelable capital leases, Remaining nine months of fiscal 2016	$ 86,398
Future minimum lease payments under non-cancelable capital leases, Fiscal 2017	114,874
Future minimum lease payments under non-cancelable capital leases, Fiscal 2018	119,086
Future minimum lease payments under non-cancelable capital leases, Fiscal 2019	113,005
Future minimum lease payments under non-cancelable capital leases, Fiscal 2020	201,507
Future minimum lease payments under non-cancelable capital leases, Thereafter	0
Future minimum lease payments under non-cancelable capital leases, Total	634,870
Less: amount representing interest	(81,799)
Present value of capital lease obligations	553,071
Future minimum lease payments under non-cancelable operating leases, Remaining nine months of fiscal 2016	227,050
Future minimum lease payments under non-cancelable operating leases, Fiscal 2017	287,795
Future minimum lease payments under non-cancelable operating leases, Fiscal 2018	244,615
Future minimum lease payments under non-cancelable operating leases, Fiscal 2019	188,841
Future minimum lease payments under non-cancelable operating leases, Fiscal 2020	181,765
Future minimum lease payments under non-cancelable operating leases, Thereafter	1,052,718
Future minimum lease payments under non-cancelable operating leases, Total	2,182,784
Financing Obligation, Building in Progress-Leased Facility, Remaining nine months of fiscal 2016	1,777
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2017	16,877
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2018	21,107
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2019	21,551
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2020	21,995
Financing Obligation, Building in Progress-Leased Facility, Thereafter	252,517
Financing Obligation, Building in Progress-Leased Facility	$ 335,824

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Debt (Tables)

3 Months Ended

Apr. 30, 2015

Debt Disclosure [Abstract]

Summary of Convertible Senior Notes

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						April 30, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,076,727	$	1,070,692

___________ 

(1)This amount represents the equity component recorded at the initial issuance of the 0.25% convertible senior notes.

If converted, holders of the 0.25% Senior Notes will receive cash equal to the principal amount, and at the Company’s election, cash, shares of the Company’s common stock, or a combination of cash and shares, for any amounts in excess of the principal amounts.

Certain terms of the conversion features of the 0.25% Senior Notes are as follows:

	Conversion Rate per $1,000 Par Value	Initial Conversion Price per Share		Convertible Date
0.25% Senior Notes	15.0512	$	66.44	January 1, 2018

Schedule of Convertible Senior Notes

The 0.25% Senior Notes consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(73,273		)	(79,308		)
Net carrying amount	$	1,076,727		$	1,070,692

(1)The effective interest rate of the 0.25% Senior Notes is 2.53%. The interest rate is based on the interest rates of similar liabilities at the time of issuance that did not have an associated convertible feature.

(2)Included in the condensed consolidated balance sheets within Convertible 0.25% Senior Notes (which is classified as a noncurrent liability) and is amortized over the life of the 0.25% Senior Notes using the effective interest rate method.

Summary of Hedge Notes

To minimize the impact of potential economic dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock (the “0.25% Note Hedges”).

(in thousands, except for shares)	Date	Purchase		Shares
0.25% Note Hedges	March 2013	$	153,800	17,308,880

Components of Warrants

Warrants

	Date	Proceeds (in thousands)		Shares	Strike Price
0.25% Warrants	March 2013	$	84,800	17,308,880	$	90.40

Schedule of Interest Expense

The following table sets forth total interest expense recognized related to the Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2015		2014
Contractual interest expense	$	3,350	$	2,903
Amortization of debt issuance costs	1,018		1,228
Amortization of debt discount	6,059		10,984
	$	10,427	$	15,115

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Debt - Additional Information (Detail) (USD $)	1 Months Ended	0 Months Ended	3 Months Ended	1 Months Ended
	Feb. 28, 2015	Oct. 06, 2014	Apr. 30, 2015	Mar. 31, 2015	Mar. 31, 2013
Debt Instrument [Line Items]
Amount outstanding			$ 0
50 Fremont Street
Debt Instrument [Line Items]
Loan assumed on 50 Fremont	200,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		650,000,000
Proceeds from revolving credit facility, net		300,000,000
Interest rate			1.60%
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Commitment fee percentage		0.125%
Revolving Credit Facility | Minimum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.00%
Revolving Credit Facility | Minimum | Adjusted LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.00%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Commitment fee percentage		0.25%
Revolving Credit Facility | Maximum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.75%
Revolving Credit Facility | Maximum | Adjusted LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Instrument [Line Items]
Par value					1,150,000,000
Contractual interest rate			0.25%		0.25%
Consecutive trading days threshold			20 days
Consecutive trading days threshold, total			30 days
Stock price trigger			130.00%
Notes price trigger			98.00%
Purchase price upon fundamental change			100.00%
Estimated fair value of Company's senior notes			1,400,000,000
Fair value debt basis amount			100
Closing prices of Company's common stock			$ 72.82
If-converted value in excess of principal			110,400,000
Line of Credit
Debt Instrument [Line Items]
Repayments of debt				300,000,000
Mortgage Loan | 50 Fremont Street
Debt Instrument [Line Items]
Contractual interest rate	3.75%
Loan assumed on 50 Fremont	$ 200,000,000

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Investments - Schedule of Components of Investment Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Interest income	$ 3,049	$ 1,764
Realized gains	2,128	117
Realized losses	(616)	(103)
Total investment income	$ 4,561	$ 1,778

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Investments - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended
	Apr. 30, 2015 investment	Jan. 31, 2015 investment
Investment Holdings [Line Items]
Unrealized losses on fixed rate investments, upper range value	$ 100,000
Strategic Investments
Investment Holdings [Line Items]
Fair value of marketable security	17,700,000	17,800,000
Number of investments in marketable equity securities	4	4
Unrealized gain on marketable securities	12,900,000	13,100,000
Investments in privately-held companies	301,000,000	158,000,000
Investments in privately-held companies, estimated fair value	$ 452,000,000	$ 280,000,000

XML

Debt - Schedule of Convertible Senior Notes (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015	Mar. 31, 2013
Convertible Senior Notes
Debt Instrument [Line Items]
Net carrying amount	$ 1,076,727	$ 1,070,692
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Instrument [Line Items]
Principal	1,150,000	1,150,000
Less: debt discount, net	$ (73,273)	$ (79,308)
Interest percentage of convertible senior notes	0.25%		0.25%
Effective interest rates of Senior Notes	2.53%

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Income Taxes - Narrative (Details) (USD $)	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 13,981,000	$ 12,142,000
Income (loss) before provision for income taxes	18,073,000	(84,769,000)
Effective tax rate	77.00%	(14.00%)
Income tax benefit recognized from stock compensation expense	43,700,000	42,600,000
Reasonably possible decrease of unrecognized tax benefits	$ 19,000,000

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Other Balance Sheet Accounts - Schedule of Other Non current Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Payables and Accruals [Abstract]
Deferred income taxes and income taxes payable	$ 106,499	$ 94,396
Customer liability, noncurrent	288	1,026
Financing obligation, building in progress-leased facility	145,255	125,289
Long-term lease liabilities and other	618,009	701,612
Other noncurrent liabilities	$ 870,051	$ 922,323

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Business Combinations (Estimated Fair Values of Assets Acquired and Liabilities Assumed) (Details) (50 Fremont Street, USD $) In Thousands, unless otherwise specified	Feb. 28, 2015
50 Fremont Street
Business Acquisition [Line Items]
Building	$ 435,390
Land	183,888
Termination of salesforce operating lease	9,483
Intangible assets	7,590
Loan assumed on 50 Fremont fair market value adjustment	1,249
Net assets acquired	$ 637,600

XML

Investments

3 Months Ended

Apr. 30, 2015

Investments Schedule [Abstract]

Investments

Investments

Marketable Securities

At April 30, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	582,682	$	1,887	$	(327	)	$	584,242
U.S. treasury securities	85,977		162		(12		)	86,127
Mortgage backed obligations	65,247		142		(554		)	64,835
Asset backed securities	170,983		142		(76		)	171,049
Municipal securities	36,418		98		(19		)	36,497
Foreign government obligations	524		17		0			541
U.S. agency obligations	15,832		12		(3		)	15,841
Covered bonds	20,893		495		0			21,388
Total marketable securities	$	978,556	$	2,955	$	(991	)	$	980,520

At January 31, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	605,724	$	3,031	$	(481	)	$	608,274
U.S. treasury securities	73,226		257		(1		)	73,482
Mortgage backed obligations	44,181		159		(415		)	43,925
Asset backed securities	120,049		131		(43		)	120,137
Municipal securities	36,447		115		(25		)	36,537
Foreign government obligations	12,023		278		0			12,301
U.S. agency obligations	19,488		26		(4		)	19,510
Covered bonds	66,816		1,185		0			68,001
Total marketable securities	$	977,954	$	5,182	$	(969	)	$	982,167

The duration of the investments classified as marketable securities is as follows (in thousands):

	As of
	April 30, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	77,059	$	87,312
Long-term (due after one year)	903,461		894,855
	$	980,520	$	982,167

As of April 30, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	201,863	$	(312	)	$	5,853	$	(15	)	$	207,716	$	(327	)
U.S. treasury securities	27,419		(12		)	0		0			27,419		(12		)
Mortgage backed obligations	48,289		(460		)	7,081		(94		)	55,370		(554		)
Asset backed securities	85,730		(70		)	3,484		(6		)	89,214		(76		)
Municipal securities	13,151		(19		)	0		0			13,151		(19		)
U.S. agency obligations	2,172		(3		)	0		0			2,172		(3		)
	$	378,624	$	(876	)	$	16,418	$	(115	)	$	395,042	$	(991	)

The unrealized losses for each of the fixed rate marketable securities were less than $100,000. The Company does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of April 30, 2015. The Company expects to receive the full principal and interest on all of these marketable securities.

Fair Value Measurement

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1.    Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2.    Other inputs that are directly or indirectly observable in the marketplace.

Level 3.    Unobservable inputs which are supported by little or no market activity.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of April 30, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of April 30, 2015
Cash equivalents (1):
Time deposits	$	0	$	57,849	$	0	$	57,849
Money market mutual funds	40,432		0		0		40,432
Marketable securities:
Corporate notes and obligations	0		584,242		0		584,242
U.S. treasury securities	0		86,127		0		86,127
Mortgage backed obligations	0		64,835		0		64,835
Asset backed securities	0		171,049		0		171,049
Municipal securities	0		36,497		0		36,497
Foreign government obligations	0		541		0		541
U.S. agency obligations	0		15,841		0		15,841
Covered bonds	0		21,388		0		21,388
Foreign currency derivative contracts (2)	0		9,465		0		9,465
Total Assets	$	40,432	$	1,047,834	$	0	$	1,088,266
Liabilities
Foreign currency derivative contracts (3)	$	0	$	2,581	$	0	$	2,581
Total Liabilities	$	0	$	2,581	$	0	$	2,581

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of April 30, 2015, in addition to $843.7 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of April 30, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the condensed consolidated balance sheet as of April 30, 2015.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of January 31, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of January 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	292,487	$	0	$	292,487
Money market mutual funds	13,983		0		0		13,983
Marketable securities:
Corporate notes and obligations	0		608,274		0		608,274
U.S. treasury securities	0		73,482		0		73,482
Mortgage backed obligations	0		43,925		0		43,925
Asset backed securities	0		120,137		0		120,137
Municipal securities	0		36,537		0		36,537
Foreign government obligations	0		12,301		0		12,301
U.S. agency obligations	0		19,510		0		19,510
Covered bonds	0		68,001		0		68,001
Foreign currency derivative contracts (2)	0		10,611		0		10,611
Total Assets	$	13,983	$	1,285,265	$	0	$	1,299,248
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,694	$	0	$	5,694
Total Liabilities	$	0	$	5,694	$	0	$	5,694

______________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of January 31, 2015, in addition to $601.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

Derivative Financial Instruments

The Company enters into foreign currency derivative contracts with financial institutions to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in British pounds, Euros, Japanese yen, Canadian dollars and Australian dollars. The Company’s foreign currency derivative contracts, which are not designated as hedging instruments, are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. The Company’s derivative financial instruments program is not designated for trading or speculative purposes. As of April 30, 2015 and January 31, 2015, the foreign currency derivative contracts that were not settled were recorded at fair value on the condensed consolidated balance sheets.

Foreign currency derivative contracts are marked-to-market at the end of each reporting period with gains and losses recognized as other expense to offset the gains or losses resulting from the settlement or remeasurement of the underlying foreign currency denominated receivables and payables. While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

Details on outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables are presented below (in thousands):

	As of
	April 30, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	731,148	$	942,086
Fair value of foreign currency derivative contracts	$	6,884	$	4,917

The fair value of the Company’s outstanding derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	April 30, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	9,465	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	2,581	$	5,694

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three months ended April 30, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Three Months Ended April 30,
	Location	2015		2014
Foreign currency derivative contracts	Other income (expense)	$	11,459	$	(12	)

Strategic Investments

As of April 30, 2015, the Company has four investments in marketable equity securities measured using quoted prices in their respective active markets and certain interests in non-marketable equity and debt securities that are collectively considered strategic investments. As of April 30, 2015, the fair value of the Company’s marketable equity securities of $17.7 million includes an unrealized gain of $12.9 million. As of January 31, 2015, the Company had four investments in marketable equity securities that had a fair value of $17.8 million, which included an unrealized gain of $13.1 million. These investments are recorded at fair value in other assets, net on the condensed consolidated balance sheets.

The Company’s interest in non-marketable equity and debt securities consists of noncontrolling equity and debt investments in privately-held companies. The Company’s investments in these privately-held companies are reported at cost or marked down to fair value when an event or circumstance indicates an other-than-temporary decline in value has occurred. These investments are valued using significant unobservable inputs or data in an inactive market and the valuation requires the Company’s judgment due to the absence of market prices and inherent lack of liquidity.

As of April 30, 2015 and January 31, 2015, the carrying value of the Company’s investments in privately-held companies was $301.0 million and $158.0 million, respectively. These investments are recorded in other assets, net on the condensed consolidated balance sheets. The estimated fair value of the Company's investments in privately-held companies was $452.0 million as of April 30, 2015. The estimated fair value of the Company's investments in privately-held companies was $280.0 million as of January 31, 2015.

Investment Income

Investment income consists of interest income, realized gains, and realized losses on the Company’s cash, cash equivalents and marketable securities. The components of investment income are presented below (in thousands):

	Three Months Ended April 30,
	2015			2014
Interest income	$	3,049		$	1,764
Realized gains	2,128			117
Realized losses	(616		)	(103		)
Total investment income	$	4,561		$	1,778

Reclassification adjustments out of accumulated other comprehensive loss into net income (loss) were immaterial for the three months ended April 30, 2015 and 2014, respectively.

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Stockholders' Equity - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		0 Months Ended	21 Months Ended	90 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Jan. 31, 2006	Apr. 30, 2015	Jul. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of the options exercised during the period	$ 113.3	$ 68.8
Weighted-average remaining contractual life of vested and expected to vest options (in years)	4 years 5 months 2 days
Options vested	9,224,356			9,224,356
Weighted average exercise price vested	$ 35.38			35.38
Weighted-average contractual life of vested and expected to vest options (in years)	2 years 7 months 6 days
Intrinsic value of vested options	345.4			345.4
Weighted-average exercise price	$ 0.001			0.001
Restricted stock units, vesting period (in years)	4 years
Weighted-average grant date fair value of the restricted stock units issued	$ 67.17	$ 63.71
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual life of stock options (in years)			10 years	7 years	5 years
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount withheld on behalf of employees for future purchases	$ 70.5			70.5

XML

Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,429,863	$ 1,745,693
Less accumulated depreciation and amortization	(692,769)	(619,827)
Property and equipment, net	1,737,094	1,125,866
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	183,888	0
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	572,164	125,289
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,203,411	1,171,762
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	75,726	71,881
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 394,674	$ 376,761

XML

Commitments (Tables)

3 Months Ended

Apr. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Future Minimum Lease Payments Under Non-Cancelable Operating And Capital Leases

As of April 30, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2016	$	86,398		$	227,050	$	1,777
Fiscal 2017	114,874			287,795		16,877
Fiscal 2018	119,086			244,615		21,107
Fiscal 2019	113,005			188,841		21,551
Fiscal 2020	201,507			181,765		21,995
Thereafter	0			1,052,718		252,517
Total minimum lease payments	634,870			$	2,182,784	$	335,824
Less: amount representing interest	(81,799		)
Present value of capital lease obligations	$	553,071

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment” and includes $145.3 million that was recorded to Financing obligation, building in progress-leased facility, which is included in Other noncurrent liabilities on the balance sheet.

XML

Earnings/Loss Per Share (Tables)

3 Months Ended

Apr. 30, 2015

Earnings Per Share [Abstract]

Reconciliation of Denominator Used In Calculation of Basic And Diluted Loss Per Share

A reconciliation of the denominator used in the calculation of basic and diluted earnings/(loss) per share is as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Numerator:
Net income (loss)	$	4,092	$	(96,911	)
Denominator:
Weighted-average shares outstanding for basic loss per share	653,809		612,512
Effect of dilutive securities:
Convertible senior notes	0		0
Employee stock awards	10,501		0
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,310		612,512

Shares Excluded From Diluted Earnings Or Loss Per Share

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings/loss per share does not include the effect of the following potential outstanding common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted earnings/loss per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2015	2014
Stock awards	8,801	20,472
Convertible senior notes	17,309	30,662
Warrants	17,309	44,253

XML

Other Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred income taxes, net	$ 44,342	$ 35,528
Prepaid income taxes	21,362	21,514
Customer contract asset	10,492	16,620
Other taxes receivable	25,592	27,540
Prepaid expenses and other current assets	209,195	179,352
Prepaid expenses and other current assets	$ 310,983	$ 280,554

XML

Property and Equipment - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Apr. 30, 2014 acre	Apr. 30, 2015 acre	Apr. 30, 2014 acre	Jan. 31, 2015	Dec. 31, 2012 sqft
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense		$ 72,500,000	$ 56,400,000
Fixed assets acquired under capital lease agreements		737,800,000		734,700,000
Area of land	8.8	8.8	8.8
Deposit for purchase of 50 Fremont land and building	30,000,000	115,015,000	0
Land and building improvements held for sale		140,345,000		143,197,000
Net rentable area (in square feet)					445,000
Property and equipment, gross		2,429,863,000		1,745,693,000
Noncurrent financing obligation liability		136,500,000
Financing obligation, tenant improvements		8,300,000
Financing obligation, imputed interest		400,000
Expected financing obligation		335,824,000
Impairment of long-lived assets		0	0
Undeveloped Real Estate
Property, Plant and Equipment [Line Items]
Land and building improvements held for sale		137,700,000
Perpetual Parking Rights
Property, Plant and Equipment [Line Items]
Total carrying value of the land, building improvements and perpetual parking rights		5,500,000
Reimbursed Property Taxes and Other Items
Property, Plant and Equipment [Line Items]
Total carrying value of the land, building improvements and perpetual parking rights		2,900,000
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Accumulated depreciation and amortization		233,300,000		206,700,000
Property and equipment, gross		1,203,411,000		1,171,762,000
Building in progress—leased facility
Property, Plant and Equipment [Line Items]
Property and equipment, gross		$ 136,500,000

XML

Summary of Business and Significant Accounting Policies - Additional Information (Detail)	3 Months Ended	12 Months Ended	3 Months Ended
	Apr. 30, 2015 Segment	Jan. 31, 2015 customer	Apr. 30, 2014 customer
Concentration Risk [Line Items]
Number of operating segments	1
Vesting period	4 years
Offering period	12 months
Expected dividend yield	0.00%
Percentage of tax benefit likely to be realized upon settlement (greater than 50%)	50.00%
Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Customers exceeding concentration of accounts receivable threshold, number	0	0
Concentration risk percentage	5.00%	5.00%
Revenue | Customer Concentration Risk
Concentration Risk [Line Items]
Customers exceeding concentration of total revenue threshold, number	0		0
Concentration risk percentage	5.00%		5.00%
Revenue | Geographic Concentration Risk | Americas
Concentration Risk [Line Items]
Concentration risk percentage	95.00%		94.00%
Revenue | Geographic Concentration Risk | All Other Countries
Concentration Risk [Line Items]
Countries exceeding concentration of total revenue threshold, number	0		0
Concentration risk percentage	10.00%		10.00%
Assets | Geographic Concentration Risk | Outside Americas
Concentration Risk [Line Items]
Concentration risk percentage	13.00%		12.00%
Minimum
Concentration Risk [Line Items]
Deferred and amortized commission period	12 months
Maximum
Concentration Risk [Line Items]
Deferred and amortized commission period	36 months

XML

Summary of Business and Significant Accounting Policies - Revenues by Geographical Region (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 1,511,167	$ 1,226,772
Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,115,120	876,377
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	258,805	230,810
Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 137,242	$ 119,585

XML

Summary of Business and Significant Accounting Policies

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Summary of Business and Significant Accounting Policies

Summary of Business and Significant Accounting Policies

Description of Business

Salesforce.com, inc. (the “Company”) is a leading provider of enterprise cloud computing services. The Company is dedicated to helping customers of all sizes and industries worldwide transform themselves into “customer companies” by empowering them to connect with their customers, partners, employees and products in entirely new ways. The Company provides customers with the solutions they need to build a next generation social front office with social and mobile cloud technologies.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2016, for example, refer to the fiscal year ending January 31, 2016.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2015 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of cash flows for the three months ended April 30, 2015 and 2014, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2015 was derived from the audited consolidated financial statements that are included in the Company’s Form 10-K for the fiscal year ended January 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2015 Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K, and include all adjustments necessary for the fair presentation of the Company’s balance sheet as of April 30, 2015, and its results of operations, including its comprehensive loss, and its cash flows for the three months ended April 30, 2015 and 2014. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2015 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.

Significant estimates and assumptions made by management include the determination of:

• the best estimate of selling price of the deliverables included in multiple deliverable revenue arrangements,

• the fair value of assets acquired and liabilities assumed for business combinations,

• the recognition, measurement and valuation of current and deferred income taxes,

• the fair value of convertible notes,

• the fair value of stock awards issued and related forfeiture rates,

• the valuation of strategic investments and the determination of other-than-temporary impairments, and

• the assessment of determination of impairment of long-lived assets (property and equipment, goodwill and identified intangibles).

Actual results could differ materially from those estimates.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segments

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is the chief executive officer, in deciding how to allocate resources and assessing performance. Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its offerings, presence and reach in various market segments of the enterprise cloud computing market. While the Company has offerings in multiple enterprise cloud computing market segments, the Company’s business operates in one operating segment because all of the Company's offerings operate on a single platform and are deployed in an identical way, andthe Company’s chief operating decision maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

Concentrations of Credit Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable. The Company maintains an allowance for doubtful accounts receivable balances. This allowance is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts.

No single customer accounted for more than five percent of accounts receivable at April 30, 2015 and January 31, 2015. No single customer accounted for five percent or more of total revenue during the three months ended April 30, 2015 and 2014.

Geographic Locations

As of April 30, 2015 and January 31, 2015, assets located outside the Americas were 13 percent and 12 percent of total assets, respectively.

Revenues by geographical region are as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Americas	$	1,115,120	$	876,377
Europe	258,805		230,810
Asia Pacific	137,242		119,585
	$	1,511,167	$	1,226,772

Americas revenue attributed to the United States was approximately 95 percent and 94 percent during the three months ended April 30, 2015 and 2014, respectively. No other country represented more than ten percent of total revenue during the three months ended April 30, 2015 and 2014.

Revenue Recognition

The Company derives its revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing the Company’s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees.

The Company commences 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.

The Company’s 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 the Company’s 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 the Company’s 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 recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

The Company enters into arrangements with multiple deliverables that generally include multiple subscriptions, premium support and professional services. If the deliverables have standalone value upon delivery, the Company accounts for each deliverable separately. Subscription services have standalone value as such services are often sold separately. In determining whether professional services have standalone value, the Company considers the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription service start date and the contractual dependence of the subscription service on the customer’s satisfaction with the professional services work. To date, the Company has concluded that all of the professional services included in multiple deliverable arrangements executed have standalone value.

Multiple deliverables included in an arrangement are separated into different units of accounting and the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The Company determines the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (“VSOE”), if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. The amount of revenue allocated to delivered items is limited by contingent revenue, if any.

For certain professional services, the Company has established VSOE as a consistent number of standalone sales of these deliverables have been priced within a reasonably narrow range. The Company has not established VSOE for its subscription services due to lack of pricing consistency, the introduction of new services and other factors. Accordingly, the Company uses its BESP to determine the relative selling price for its subscription services.

The Company determines BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, its go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by the Company’s management, taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP.

Deferred Revenue

The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above and is recognized as the revenue recognition criteria are met. The Company generally invoices customers in annual installments. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business linearity within the quarter.

Deferred revenue that will be recognized during the succeeding twelve month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent.

Deferred Commissions

Deferred commissions are the incremental costs that are directly associated with non-cancelable subscription contracts with customers and consist of sales commissions paid to the Company’s direct sales force.

The commissions are deferred and amortized over the non-cancelable terms of the related customer contracts, which are typically 12 to 36 months. The commission payments are paid in full the month after the customer’s service commences. The deferred commission amounts are recoverable through the future revenue streams under the non-cancelable customer contracts. The Company believes this is the preferable method of accounting as the commission charges are so closely related to the revenue from the non-cancelable customer contracts that they should be recorded as an asset and charged to expense over the same period that the subscription revenue is recognized. Amortization of deferred commissions is included in marketing and sales expense in the accompanying condensed consolidated statements of operations.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value.

Marketable Securities

Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the condensed consolidated statements of comprehensive loss. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, the Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value and its intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of investment income.

Fair Value Measurement

The Company measures its cash equivalents, marketable securities and foreign currency derivative contracts at fair value.

The additional disclosures regarding the Company’s fair value measurements are included in Note 2 “Investments”.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows:

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from their respective accounts and any loss on such retirement is reflected in operating expenses.

Capitalized Internal-Use Software Costs

The Company capitalizes costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable.

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Business Combinations

The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations.

Leases and Asset Retirement Obligations

The Company categorizes leases at their inception as either operating or capital leases. In certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis once control of the space is achieved, without regard to deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.

The Company establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period of the operating expense.

The Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

The Company additionally has entered into subleases for unoccupied leased office space. Losses are recognized in the period the sublease is executed. Any sublease payments received in excess of the straight-line rent payments for the sublease are recorded in other income (expense).

Accounting for Stock-Based Expense

The Company recognizes stock-based expenses related to stock options and restricted stock awards on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of four years. The Company recognizes stock-based expenses related to shares issued pursuant to its 2004 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period, which is 12 months. Stock-based expenses are recognized net of estimated forfeiture activity. The estimated forfeiture rate applied is based on historical forfeiture rates. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option pricing model.

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share:

	Three Months Ended   April 30,
Stock Options	2015			2014
Volatility	37.4		%	37.0		%
Estimated life	3.6 years			3.5 years
Risk-free interest rate	1.13-1.36		%	1.20-1.39		%
Weighted-average fair value per share of grants	$	19.52		$	16.93

There were no stock purchase rights granted under the ESPP in the three months ended April 30, 2015 or 2014 as these stock purchase rights are only granted in June and December.

The Company estimated its future stock price volatility considering both its observed option-implied volatilities and its historical volatility calculations. Management believes this is the best estimate of the expected volatility over the expected life of its stock options and stock purchase rights.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the condensed consolidated statement of operations in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.

The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, solely based on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision.

Foreign Currency Translation

The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the condensed consolidated statements of comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates.

Warranties and Indemnification

The Company’s enterprise cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

New Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. This standard establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. In April 2015, the FASB proposed a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, ASU 2014-09 will be effective for fiscal 2019, including interim periods within that reporting period. The Company is currently in the process of assessing the adoption methodology, which allows the amendment to be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial application. The Company is also evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.

XML

Summary of Business and Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Detail)	3 Months Ended
	Apr. 30, 2015
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Minimum | Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Minimum | Capitalized internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Maximum | Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	9 years
Maximum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	10 years
Maximum | Capitalized internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years

XML

Investments - Fair Value of Outstanding Derivative Instruments (Detail) (Derivatives not designated as hedging instruments, Foreign currency derivative contracts, USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 9,465	$ 10,611
Accounts payable, accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative Liabilities	$ 2,581	$ 5,694

XML

Debt - Summary of Hedge Notes (Detail) (Convertible Debt, 0.25% Note Hedges, USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Apr. 30, 2015
Convertible Debt | 0.25% Note Hedges
Derivatives, Fair Value [Line Items]
Purchase	$ 153,800
Shares	17,308,880

XML

Related-Party Transactions (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 30, 2015
Related Party Transactions [Abstract]
Value of resources donated to related parties	$ 0.3
Value of donated subscriptions to related parties	$ 14.1

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Current assets:
Cash and cash equivalents	$ 941,956	$ 908,117
Short-term marketable securities	77,059	87,312
Accounts receivable, net	926,381	1,905,506
Deferred commissions	208,101	225,386
Prepaid expenses and other current assets	310,983	280,554
Land and building improvements held for sale	140,345	143,197
Total current assets	2,604,825	3,550,072
Marketable securities, noncurrent	903,461	894,855
Property and equipment, net	1,737,094	1,125,866
Deferred commissions, noncurrent	153,018	162,796
Capitalized software, net	421,323	433,398
Goodwill	3,791,583	3,782,660
Other assets, net	754,378	628,320
Restricted cash	0	115,015
Total assets	10,365,682	10,692,982
Current liabilities:
Accounts payable, accrued expenses and other liabilities	928,105	1,103,335
Deferred revenue	3,032,771	3,286,768
Total current liabilities	3,960,876	4,390,103
Convertible 0.25% senior notes, net	1,076,727	1,070,692
Loan assumed on 50 Fremont	198,776	0
Revolving credit facility	0	300,000
Deferred revenue, noncurrent	24,049	34,681
Other noncurrent liabilities	870,051	922,323
Total liabilities	6,130,479	6,717,799
Stockholders’ equity:
Common stock	656	651
Additional paid-in capital	4,864,652	4,604,485
Accumulated other comprehensive loss	(28,352)	(24,108)
Accumulated deficit	(601,753)	(605,845)
Total stockholders’ equity	4,235,203	3,975,183
Total liabilities and stockholders’ equity	$ 10,365,682	$ 10,692,982

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Business Combinations (Narrative) (Details) (USD $)	3 Months Ended		0 Months Ended	1 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Apr. 30, 2015 sqft	Feb. 28, 2015 sqft story	Dec. 31, 2012 sqft
Business Acquisition [Line Items]
Net rentable area (in square feet)					445,000
Business combinations, net of cash acquired	$ 12,470,000	$ 0
50 Fremont Street
Business Acquisition [Line Items]
Number of stories in building				41
Net rentable area (in square feet)				817,000
Area leased			515,000	500,000
Proceeds of like-kind exchange account				115,000,000
Non-cash gain on termination of lease				36,600,000
Reversal of tenant incentives				46,100,000
Termination of salesforce operating lease				9,483,000
Other Business Combination
Business Acquisition [Line Items]
Number of businesses acquired	1
Business combinations, net of cash acquired	12,400,000
Goodwill acquired	$ 8,923,000

XML

Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 4,092	$ (96,911)
Other comprehensive loss, before tax and net of reclassification adjustments:
Foreign currency translation and other gains (losses)	(1,855)	3,115
Unrealized losses on investments	(2,389)	(5,497)
Other comprehensive loss, before tax	(4,244)	(2,382)
Tax effect	0	0
Other comprehensive loss, net of tax	(4,244)	(2,382)
Comprehensive loss	$ (152)	$ (99,293)

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Other Balance Sheet Accounts - Schedule of Other Assets (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Deferred income taxes, noncurrent, net	$ 8,930	$ 9,275
Long-term deposits	19,163	19,715
Strategic investments	318,716	175,774
Customer contract asset	407	1,447
Other	74,002	76,259
Other assets, net	754,378	628,320
Purchased intangible assets, net of accumulated amortization of $150,963 and $130,968, respectively
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	317,565	329,971
Accumulated amortization	150,963	130,968
Acquired intellectual property, net of accumulated amortization of $17,409 and $15,695, respectively
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	15,595	15,879
Accumulated amortization	$ 17,409	$ 15,695

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Investments - Schedule of Short-Term and Long-Term Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Short-term (due in one year or less)	$ 77,059	$ 87,312
Long-term (due after one year)	903,461	894,855
Fair Value of Marketable Securities	$ 980,520	$ 982,167

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Stockholders' Equity - Schedule of Restricted Stock Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Apr. 30, 2015
Restricted Stock Outstanding
Ending Balance	21,377,180
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance	$ 0.001
Restricted Stock Activity
Restricted Stock Outstanding
Beginning Balance	23,144,008
Granted, Outstanding	1,072,962
Cancelled, Outstanding	(1,011,129)
Vested and converted to shares, Outstanding	(1,828,661)
Ending Balance	21,377,180
Expected to vest, Outstanding	18,423,081
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Granted	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Cancelled	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Vested and converted to shares	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance	$ 0.001
Restricted Stock Outstanding Aggregate Intrinsic Value
Aggregate Intrinsic Value, Ending Balance	$ 1,556,686
Aggregate Intrinsic Value, Expected to vest	$ 1,341,569

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Investments (Tables)

3 Months Ended

Apr. 30, 2015

Investments Schedule [Abstract]

Schedule of Marketable Securities

At April 30, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	582,682	$	1,887	$	(327	)	$	584,242
U.S. treasury securities	85,977		162		(12		)	86,127
Mortgage backed obligations	65,247		142		(554		)	64,835
Asset backed securities	170,983		142		(76		)	171,049
Municipal securities	36,418		98		(19		)	36,497
Foreign government obligations	524		17		0			541
U.S. agency obligations	15,832		12		(3		)	15,841
Covered bonds	20,893		495		0			21,388
Total marketable securities	$	978,556	$	2,955	$	(991	)	$	980,520

At January 31, 2015, marketable securities consisted of the following (in thousands):

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	605,724	$	3,031	$	(481	)	$	608,274
U.S. treasury securities	73,226		257		(1		)	73,482
Mortgage backed obligations	44,181		159		(415		)	43,925
Asset backed securities	120,049		131		(43		)	120,137
Municipal securities	36,447		115		(25		)	36,537
Foreign government obligations	12,023		278		0			12,301
U.S. agency obligations	19,488		26		(4		)	19,510
Covered bonds	66,816		1,185		0			68,001
Total marketable securities	$	977,954	$	5,182	$	(969	)	$	982,167

Schedule of Short-Term and Long-Term Marketable Securities

The duration of the investments classified as marketable securities is as follows (in thousands):

	As of
	April 30, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	77,059	$	87,312
Long-term (due after one year)	903,461		894,855
	$	980,520	$	982,167

Schedule of Marketable Securities in a Unrealized Loss Position

As of April 30, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	201,863	$	(312	)	$	5,853	$	(15	)	$	207,716	$	(327	)
U.S. treasury securities	27,419		(12		)	0		0			27,419		(12		)
Mortgage backed obligations	48,289		(460		)	7,081		(94		)	55,370		(554		)
Asset backed securities	85,730		(70		)	3,484		(6		)	89,214		(76		)
Municipal securities	13,151		(19		)	0		0			13,151		(19		)
U.S. agency obligations	2,172		(3		)	0		0			2,172		(3		)
	$	378,624	$	(876	)	$	16,418	$	(115	)	$	395,042	$	(991	)

Schedule of Assets and Liabilities Measured at Fair Value an a Recurring Basis

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of April 30, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of April 30, 2015
Cash equivalents (1):
Time deposits	$	0	$	57,849	$	0	$	57,849
Money market mutual funds	40,432		0		0		40,432
Marketable securities:
Corporate notes and obligations	0		584,242		0		584,242
U.S. treasury securities	0		86,127		0		86,127
Mortgage backed obligations	0		64,835		0		64,835
Asset backed securities	0		171,049		0		171,049
Municipal securities	0		36,497		0		36,497
Foreign government obligations	0		541		0		541
U.S. agency obligations	0		15,841		0		15,841
Covered bonds	0		21,388		0		21,388
Foreign currency derivative contracts (2)	0		9,465		0		9,465
Total Assets	$	40,432	$	1,047,834	$	0	$	1,088,266
Liabilities
Foreign currency derivative contracts (3)	$	0	$	2,581	$	0	$	2,581
Total Liabilities	$	0	$	2,581	$	0	$	2,581

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of April 30, 2015, in addition to $843.7 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of April 30, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the condensed consolidated balance sheet as of April 30, 2015.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of January 31, 2015 and indicates the fair value hierarchy of the valuation (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of January 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	292,487	$	0	$	292,487
Money market mutual funds	13,983		0		0		13,983
Marketable securities:
Corporate notes and obligations	0		608,274		0		608,274
U.S. treasury securities	0		73,482		0		73,482
Mortgage backed obligations	0		43,925		0		43,925
Asset backed securities	0		120,137		0		120,137
Municipal securities	0		36,537		0		36,537
Foreign government obligations	0		12,301		0		12,301
U.S. agency obligations	0		19,510		0		19,510
Covered bonds	0		68,001		0		68,001
Foreign currency derivative contracts (2)	0		10,611		0		10,611
Total Assets	$	13,983	$	1,285,265	$	0	$	1,299,248
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,694	$	0	$	5,694
Total Liabilities	$	0	$	5,694	$	0	$	5,694

______________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of January 31, 2015, in addition to $601.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying condensed consolidated balance sheet as of January 31, 2015.

Schedule of Outstanding Foreign Currency Derivative Contracts Related Primarily to Intercompany Receivables and Payables

Details on outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables are presented below (in thousands):

	As of
	April 30, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	731,148	$	942,086
Fair value of foreign currency derivative contracts	$	6,884	$	4,917

Fair Value of Outstanding Derivative Instruments

The fair value of the Company’s outstanding derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	April 30, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	9,465	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	2,581	$	5,694

Schedule of The Effect of The Derivative Instruments Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Operations

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three months ended April 30, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Three Months Ended April 30,
	Location	2015		2014
Foreign currency derivative contracts	Other income (expense)	$	11,459	$	(12	)

Schedule of Components of Investment Income

Investment income consists of interest income, realized gains, and realized losses on the Company’s cash, cash equivalents and marketable securities. The components of investment income are presented below (in thousands):

	Three Months Ended April 30,
	2015			2014
Interest income	$	3,049		$	1,764
Realized gains	2,128			117
Realized losses	(616		)	(103		)
Total investment income	$	4,561		$	1,778

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Investments - Schedule of Marketable Securities in Unrealized Loss Position (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	$ 378,624
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(876)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	16,418
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(115)
Marketable securities in an unrealized loss position, Fair Value	395,042
Marketable securities in an unrealized loss position, Unrealized Losses	(991)
Corporate notes and obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	201,863
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(312)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	5,853
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(15)
Marketable securities in an unrealized loss position, Fair Value	207,716
Marketable securities in an unrealized loss position, Unrealized Losses	(327)
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	27,419
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(12)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	27,419
Marketable securities in an unrealized loss position, Unrealized Losses	(12)
Mortgage backed obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	48,289
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(460)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	7,081
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(94)
Marketable securities in an unrealized loss position, Fair Value	55,370
Marketable securities in an unrealized loss position, Unrealized Losses	(554)
Asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	85,730
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(70)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	3,484
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(6)
Marketable securities in an unrealized loss position, Fair Value	89,214
Marketable securities in an unrealized loss position, Unrealized Losses	(76)
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	13,151
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(19)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	13,151
Marketable securities in an unrealized loss position, Unrealized Losses	(19)
U.S. agency obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	2,172
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(3)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	2,172
Marketable securities in an unrealized loss position, Unrealized Losses	$ (3)

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Business Combinations (Tables)

3 Months Ended

Apr. 30, 2015

Business Acquisition [Line Items]

Schedule of Goodwill

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combination	8,923
Balance as of April 30, 2015	$	3,791,583

50 Fremont Street

Business Acquisition [Line Items]

Schedule of Consideration Transferred

The purchase consideration for the corporate headquarters building was as follows (in thousands):

	Fair Value
Cash	$	435,189
Loan assumed on 50 Fremont	200,000
Prorations due to ownership transfer midmonth	2,411
Total purchase consideration	$	637,600

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the fair values of net tangible and intangible assets acquired (in thousands):

	Fair Value
Building	$	435,390
Land	183,888
Termination of salesforce operating lease	9,483
Acquired lease intangibles	7,590
Loan assumed on 50 Fremont fair market value adjustment	1,249
Total	$	637,600

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Earnings/Loss Per Share - Reconciliation of Denominator Used in Calculation of Basic and Diluted Loss Per Share (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Earnings Per Share [Abstract]
Net income (loss)	$ 4,092	$ (96,911)
Weighted-average shares outstanding for basic loss per share (in shares)	653,809	612,512
Convertible senior notes (in shares)	0	0
Employee stock awards (in shares)	10,501	0
Warrants (in shares)	0	0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share (in shares)	664,310	612,512

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015		Apr. 30, 2014
Operating activities:
Net income (loss)	$ 4,092		$ (96,911)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	127,927		110,808
Amortization of debt discount and transaction costs	5,861		11,791
50 Fremont lease termination, net	(36,617)	[1],[2]	0	[1],[2]
Loss on conversions of convertible senior notes	0		8,529
Amortization of deferred commissions	77,155		59,855
Expenses related to employee stock plans	142,560		131,092
Excess tax benefits from employee stock plans	(4,224)		(9,041)
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net	979,170		676,682
Deferred commissions	(50,092)		(40,896)
Prepaid expenses and other current assets and other assets	(11,274)		4,277
Accounts payable, accrued expenses and other liabilities	(239,072)		(185,599)
Deferred revenue	(264,629)		(197,500)
Net cash provided by operating activities	730,857		473,087
Investing activities:
Business combination, net of cash acquired	(12,470)		0
Purchase of 50 Fremont land and building	(425,376)		0
Deposit for purchase of 50 Fremont land and building	115,015		0
Non-refundable amounts received for sale of land available for sale	2,852		30,000
Strategic investments	(144,462)		(16,246)
Purchases of marketable securities	(207,225)		(250,536)
Sales of marketable securities	192,184		79,312
Maturities of marketable securities	14,446		7,198
Capital expenditures	(71,087)		(60,098)
Net cash used in investing activities	(536,123)		(210,370)
Financing activities:
Proceeds from employee stock plans	155,015		73,795
Excess tax benefits from employee stock plans	4,224		9,041
Payments on convertible senior notes	0		(283,892)
Principal payments on capital lease obligations	(16,825)		(10,594)
Payments on revolving credit facility and term loan	(300,000)		(7,500)
Net cash used in financing activities	(157,586)		(219,150)
Effect of exchange rate changes	(3,309)		2,689
Net increase in cash and cash equivalents	33,839		46,256
Cash and cash equivalents, beginning of period	908,117		781,635
Cash and cash equivalents, end of period	941,956		827,891
Cash paid during the period for:
Interest	4,252		8,667
Income taxes, net of tax refunds	10,581		9,994
Non-cash financing and investing activities:
Fixed assets acquired under capital leases	2,960		5,886
Building in progress - leased facility acquired under financing obligation	19,966		12,760
Fair value of loan assumed on 50 Fremont	$ 198,751		$ 0

[1] Amounts include stock-based expense, as follows: Three Months Ended April 30, 2015 2014Cost of revenues $15,381 $11,810Research and development 31,242 27,284Marketing and sales 70,534 67,133General and administrative 25,403 24,865

[2] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended April 30, 2015 2014Cost of revenues $19,690 $28,672Marketing and sales 20,027 14,965Other non-operating expense 815 0

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Consolidated Balance Sheets (Parenthetical) (Notes Payable to Banks, 0.25% Convertible Senior Notes due April 1, 2018)	Apr. 30, 2015	Jan. 31, 2015
Notes Payable to Banks | 0.25% Convertible Senior Notes due April 1, 2018
Interest percentage of convertible senior notes	0.25%	0.25%

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Commitments

3 Months Ended

Apr. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments

Letters of Credit

As of April 30, 2015, the Company had a total of $67.9 million in letters of credit outstanding substantially in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through December 2030.

Leases

The Company leases facilities space and certain fixed assets under non-cancelable operating and capital leases with various expiration dates.

As of April 30, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2016	$	86,398		$	227,050	$	1,777
Fiscal 2017	114,874			287,795		16,877
Fiscal 2018	119,086			244,615		21,107
Fiscal 2019	113,005			188,841		21,551
Fiscal 2020	201,507			181,765		21,995
Thereafter	0			1,052,718		252,517
Total minimum lease payments	634,870			$	2,182,784	$	335,824
Less: amount representing interest	(81,799		)
Present value of capital lease obligations	$	553,071

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment” and includes $145.3 million that was recorded to Financing obligation, building in progress-leased facility, which is included in Other noncurrent liabilities on the balance sheet.

The Company’s agreements for the facilities and certain services provide the Company with the option to renew. The Company’s future contractual obligations would change if the Company exercised these options.

The terms of the lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Of the total operating lease commitment balance of $2.2 billion, approximately $1.9 billion is related to facilities space. The remaining commitment amount is related to computer equipment, other leases, data center capacity and our development and test data center.

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Document and Entity Information In Millions, unless otherwise specified	3 Months Ended
	Apr. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	CRM
Entity Registrant Name	SALESFORCE COM INC
Entity Central Index Key	0001108524
Current Fiscal Year End Date	--01-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	656.0

XML

Legal Proceedings and Claims

3 Months Ended

Apr. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings and Claims

Legal Proceedings and Claims

In the ordinary course of business, the Company is or may be involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, class actions, wage and hour, and other claims. The Company has been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

During fiscal 2015, the Company received a communication from a large technology company alleging that the Company infringed certain of its patents.  The Company continues to analyze this claim.  No litigation has been filed to date.  There can be no assurance that this claim will not lead to litigation in the future.  The resolution of this claim is not expected to have a material adverse effect on the Company's financial condition, but it could be material to the net income or cash flows or both of a particular quarter. 

In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s operating results.

The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s condensed consolidated results of operations, cash flows or financial position. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect the Company’s future results of operations or cash flows, or both, of a particular quarter.

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 30, 2015		Apr. 30, 2014
Revenues:
Subscription and support	$ 1,405,287		$ 1,147,306
Professional services and other	105,880		79,466
Total revenues	1,511,167		1,226,772
Cost of revenues:
Subscription and support	274,241	[1],[2]	208,947	[1],[2]
Professional services and other	107,561	[1],[2]	83,358	[1],[2]
Total cost of revenues	381,802	[1],[2]	292,305	[1],[2]
Gross profit	1,129,365	[1],[2]	934,467	[1],[2]
Operating expenses:
Research and development	222,128	[1],[2]	188,358	[1],[2]
Marketing and sales	736,938	[1],[2]	639,355	[1],[2]
General and administrative	175,811	[1],[2]	162,095	[1],[2]
Operating lease termination resulting from purchase of 50 Fremont, net	(36,617)	[1],[2]	0	[1],[2]
Total operating expenses	1,098,260	[1],[2]	989,808	[1],[2]
Income (loss) from operations	31,105		(55,341)
Investment income	4,561		1,778
Interest expense	(16,675)		(20,359)
Other expense (1)(3)	(918)	[2],[3]	(10,847)	[2],[3]
Income (loss) before provision for income taxes	18,073		(84,769)
Provision for income taxes	(13,981)		(12,142)
Net income (loss)	$ 4,092		$ (96,911)
Basic net income (loss) per share (in dollars per share)	$ 0.01		$ (0.16)
Diluted net income (loss) per share (in dollars per share)	$ 0.01		$ (0.16)
Shares used in computing basic net income (loss) per share (in shares)	653,809		612,512
Shares used in computing diluted net income (loss) per share (in shares)	664,310		612,512

[1] Amounts include stock-based expense, as follows: Three Months Ended April 30, 2015 2014Cost of revenues $15,381 $11,810Research and development 31,242 27,284Marketing and sales 70,534 67,133General and administrative 25,403 24,865

[2] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended April 30, 2015 2014Cost of revenues $19,690 $28,672Marketing and sales 20,027 14,965Other non-operating expense 815 0

[3] Amount includes approximately $8.5 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the three months ended April 30, 2014.

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Debt

3 Months Ended

Apr. 30, 2015

Debt Disclosure [Abstract]

Debt

Debt

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						April 30, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,076,727	$	1,070,692

___________ 

(1)This amount represents the equity component recorded at the initial issuance of the 0.25% convertible senior notes.

In March 2013, the Company issued at par value $1.15 billion of 0.25% convertible senior notes (the “0.25% Senior Notes”, or the “Notes”) due April 1, 2018, unless earlier purchased by the Company or converted. Interest is payable semi-annually, in arrears on April 1 and October 1 of each year.

The 0.25% Senior Notes are governed by an indenture between the Company, as issuer, and U.S. Bank National Association, as trustee. The 0.25% Senior Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by the Company.

If converted, holders of the 0.25% Senior Notes will receive cash equal to the principal amount, and at the Company’s election, cash, shares of the Company’s common stock, or a combination of cash and shares, for any amounts in excess of the principal amounts.

Certain terms of the conversion features of the 0.25% Senior Notes are as follows:

	Conversion Rate per $1,000 Par Value	Initial Conversion Price per Share		Convertible Date
0.25% Senior Notes	15.0512	$	66.44	January 1, 2018

Throughout the term of the 0.25% Senior Notes, the conversion rate may be adjusted upon the occurrence of certain events, including any cash dividends. Holders of the 0.25% Senior Notes will not receive any cash payment representing accrued and unpaid interest upon conversion of a Note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than canceled, extinguished or forfeited.

Holders may convert the 0.25% Senior Notes under the following circumstances:

• during any fiscal quarter, if, for at least 20 trading days during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sales price of the Company’s common stock for such trading day is greater than or equal to 130% of the applicable conversion price on such trading day;

• in certain situations, when the trading price of the 0.25% Senior Notes is less than 98% of the product of the sale price of the Company’s common stock and the conversion rate;

• upon the occurrence of specified corporate transactions described under the 0.25% Senior Notes indenture, such as a consolidation, merger or binding share exchange; or

• at any time on or after the convertible date noted above.

Holders of the 0.25% Senior Notes have the right to require the Company to purchase with cash all or a portion of the Notes upon the occurrence of a fundamental change, such as a change of control, at a purchase price equal to 100% of the principal amount of the 0.25% Senior Notes plus accrued and unpaid interest. Following certain corporate transactions that constitute a change of control, the Company will increase the conversion rate for a holder who elects to convert the 0.25% Senior Notes in connection with such change of control.

In accounting for the issuances of the 0.25% Senior Notes, the Company separated the 0.25% Senior Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 0.25% Senior Notes as a whole. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the 0.25% Senior Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the 0.25% Senior Notes issuance, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to expense over the terms of the 0.25% Senior Notes, and transaction costs attributable to the equity component were netted with the equity component in temporary stockholders’ equity and stockholders’ equity.

The 0.25% Senior Notes consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(73,273		)	(79,308		)
Net carrying amount	$	1,076,727		$	1,070,692

(1)The effective interest rate of the 0.25% Senior Notes is 2.53%. The interest rate is based on the interest rates of similar liabilities at the time of issuance that did not have an associated convertible feature.

(2)Included in the condensed consolidated balance sheets within Convertible 0.25% Senior Notes (which is classified as a noncurrent liability) and is amortized over the life of the 0.25% Senior Notes using the effective interest rate method.

The total estimated fair value of the Company’s 0.25% Senior Notes at April 30, 2015 was $1.4 billion. The fair value was determined based on the closing trading price per $100 of the 0.25% Senior Notes as of the last day of trading for the first quarter of fiscal 2016.

Based on the closing price of the Company’s common stock of $72.82 on April 30, 2015, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $110.4 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended April 30, 2015.

Note Hedges

To minimize the impact of potential economic dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock (the “0.25% Note Hedges”).

(in thousands, except for shares)	Date	Purchase		Shares
0.25% Note Hedges	March 2013	$	153,800	17,308,880

The 0.25% Note Hedges cover shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 0.25% Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The 0.25% Note Hedges will expire upon the maturity of the 0.25% Notes. The 0.25% Note Hedges are intended to reduce the potential economic dilution upon conversion of the 0.25% Notes in the event that the market value per share of the Company’s common stock, as measured under the 0.25% Notes, at the time of exercise is greater than the conversion price of the 0.25% Notes. The 0.25% Note Hedges are separate transactions and are not part of the terms of the 0.25% Notes. Holders of the 0.25% Notes will not have any rights with respect to the 0.25% Note Hedges. The 0.25% Note Hedges do not impact earnings per share.

Warrants

	Date	Proceeds (in thousands)		Shares	Strike Price
0.25% Warrants	March 2013	$	84,800	17,308,880	$	90.40

In March 2013, the Company also entered into a warrants transaction (the “0.25% Warrants”), whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock. The 0.25% Warrants were anti-dilutive for the periods presented. The 0.25% Warrants are separate transactions entered into by the Company and are not part of the terms of the 0.25% Notes or the 0.25% Note Hedges. Holders of the 0.25% Notes and 0.25% Note Hedges will not have any rights with respect to the 0.25% Warrants.

Revolving Credit Facility

In October 2014, the Company entered into an agreement (the “Credit Agreement”) with Wells Fargo, N.A. and certain other institutional lenders that provides for a $650.0 million unsecured revolving credit facility that matures in October 2019 (the “Credit Facility”). Immediately upon closing, the Company borrowed $300.0 million under the Credit Facility. The Borrowings under the Credit Facility bear interest, at the Company’s option at either a base rate, as defined in the Credit Agreement, plus a margin of 0.00% to 0.75% or LIBOR plus a margin of 1.00% to 1.75%. The Company is obligated to pay ongoing commitment fees at a rate between 0.125% and 0.25%. Such interest rate margins and commitment fees are based on the Company’s consolidated leverage ratio for the preceding four fiscal quarter periods. Interest and the commitment fees are payable in arrears quarterly. The Company may use amounts borrowed under the Credit Facility for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. Subject to certain conditions stated in the Credit Agreement, the Company may borrow amounts under the Credit Facility at any time during the term of the Credit Agreement. The Company may also prepay borrowings under the Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may be reborrowed.

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on the Company’s ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on the Company’s activities each defined specifically in the Credit Agreement. The Company was in compliance with the Credit Agreement’s covenants as of April 30, 2015.

In March 2015, the Company paid down $300.0 million of outstanding borrowings under the Credit Facility. There are currently no outstanding borrowings held under the Credit Facility as of April 30, 2015.

The weighted average interest rate on borrowings under the Credit Facility was 1.6% for the period beginning in October 2014 and ended April 30, 2015.

Loan Assumed on 50 Fremont

The Company assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan requires interest only payments with the remaining principal due at maturity. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that the Company was in compliance with as of April 30, 2015.

Interest Expense on Convertible Senior Notes, Revolving Credit Facility and Loan Secured by 50 Fremont

The following table sets forth total interest expense recognized related to the Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2015		2014
Contractual interest expense	$	3,350	$	2,903
Amortization of debt issuance costs	1,018		1,228
Amortization of debt discount	6,059		10,984
	$	10,427	$	15,115

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Business Combinations

3 Months Ended

Apr. 30, 2015

Business Combinations [Abstract]

Business Combinations

Business Combinations

50 Fremont

In February 2015, the Company acquired 50 Fremont Street, a 41-story building totaling approximately 817,000 rentable square feet located in San Francisco, California (“50 Fremont”). At the time of the acquisition, the Company was leasing approximately 500,000 square feet of the available space in 50 Fremont. As of April 30, 2015, the Company occupied approximately 515,000 square feet. The Company acquired 50 Fremont for the purpose of expanding its global headquarters in San Francisco. Pursuant to the acquisition agreement, the Company also acquired existing third-party leases and other intangible property and terminated the Company’s existing office leases with the seller. In accordance with ASC 805, Business Combinations, the Company accounted for the building purchase as a business combination.

The purchase consideration for the corporate headquarters building was as follows (in thousands):

	Fair Value
Cash	$	435,189
Loan assumed on 50 Fremont	200,000
Prorations due to ownership transfer midmonth	2,411
Total purchase consideration	$	637,600

The following table summarizes the fair values of net tangible and intangible assets acquired (in thousands):

	Fair Value
Building	$	435,390
Land	183,888
Termination of salesforce operating lease	9,483
Acquired lease intangibles	7,590
Loan assumed on 50 Fremont fair market value adjustment	1,249
Total	$	637,600

To fund the purchase of 50 Fremont, the Company used $115.0 million of restricted cash that the Company had on the balance sheet as of January 31, 2015.

In connection with the purchase, the Company recognized a net non-cash gain totaling approximately $36.6 million on the termination of the lease signed in January 2012. This amount reflects a gain of $46.1 million for the reversal of tenant incentives provided from the previous landlord at the inception of the lease and a loss of $9.5 million related to the termination of the Company's operating lease. The tax impact as a result of the difference between tax and book basis of the building is insignificant after considering the impact of the Company's valuation allowance. These amounts above have been included in the Company's condensed consolidated statements of operations and condensed consolidated balance sheets. The Company has included the rental income from third party leases with other tenants in the building, and the proportionate share of building expenses for those leases, in other expense in the Company's condensed consolidated results of operations from the date of acquisition. These amounts are recorded in other expense as this net rental income is not part of our core operations. These amounts were not material for the periods presented. The Company expects to finalize the depreciable life of the building as soon as practicable, but not later than one year from the acquisition date.

Other Business Combination

During the three months ended April 30, 2015, the Company acquired one company for an aggregate of $12.4 million in cash, net of cash acquired, and has included the financial results of this company in its condensed consolidated financial statements from the date of acquisition. The Company accounted for this transaction as a business combination. In allocating the purchase consideration based on estimated fair values, the Company recorded $8.9 million of goodwill. Some of this goodwill balance is not deductible for U.S. income tax purposes.

Goodwill

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter.

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combination	8,923
Balance as of April 30, 2015	$	3,791,583

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Property and Equipment (Tables)

3 Months Ended

Apr. 30, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property And Equipment

Property and equipment consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	572,164			125,289
Computers, equipment and software	1,203,411			1,171,762
Furniture and fixtures	75,726			71,881
Leasehold improvements	394,674			376,761
	2,429,863			$	1,745,693
Less accumulated depreciation and amortization	(692,769		)	(619,827		)
	$	1,737,094		$	1,125,866

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Related-Party Transactions

3 Months Ended

Apr. 30, 2015

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

In January 1999, the Salesforce.com Foundation, which recently became a private foundation, also referred to as the Foundation, was chartered to build philanthropic programs that are focused on youth and technology. Beginning in 2008, Salesforce.org, which is a non-profit mutual benefit corporation, was established to resell the Company’s services to nonprofit organizations and certain higher education organizations. The Company’s chairman is the chairman of both the Foundation and Salesforce.org. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of the Foundation’s nine board seats. The Company’s chairman and one of the Company’s employees hold two of Salesforce.org’s six board seats. The Company does not control the Foundation’s or Salesforce.org's activities, and accordingly, the Company does not consolidate either of the related entities' statement of activities with its financial results.

Since the Foundation’s inception, the Company has provided at no charge certain resources to Foundation employees such as office space. The value of these items was approximately $0.3 million for the three months ended April 30, 2015.

Additionally, the Company has donated subscriptions to the Company’s service to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain higher education entities. The Company does not charge Salesforce.org for these subscriptions, so revenue from subscriptions provided to non-profit organizations is provided to the Foundation to fund its charitable work. The value of the subscriptions pursuant to reseller agreements was approximately $14.1 million for the three months ended April 30, 2015. The Company plans to continue these programs.

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Income Taxes

3 Months Ended

Apr. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year to date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the three months ended April 30, 2015, the Company reported a tax provision of $14.0 million on a pretax income of $18.1 million, which resulted in an effective tax rate of 77 percent. The tax provision recorded was primarily related to income taxes in profitable jurisdictions outside of the U.S.

For the three months ended April 30, 2014, the Company reported a tax expense of $12.1 million on a pretax loss of $84.8 million, which resulted in a negative effective tax rate of 14 percent. The tax provision recorded was related to income taxes in profitable jurisdictions outside the U.S. and the current tax expense in the U.S. The Company had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock. This U.S. current tax expense was partially offset by tax benefit attributable to losses in certain U.S. states with no valuation allowance.

Tax Benefits Related to Stock-Based Compensation

The total income tax benefit related to stock-based awards was $43.7 million and $42.6 million for three months ended April 30, 2015 and 2014, respectively, the majority of which was not recognized as a result of the valuation allowance.

Unrecognized Tax Benefits and Other Considerations

The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. During the quarter ended April 30, 2015, the Company reached a settlement agreement upon completion of its tax examination in Japan which did not result in material impact to its income tax provision. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Germany, Switzerland and the United Kingdom. To date, the Company has not received any material proposed adjustments.

The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. In the next 12 months, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $19 million may occur.

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Other Balance Sheet Accounts - Schedule of Accrued Expenses and Other Current Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Payables and Accruals [Abstract]
Accounts payable	$ 60,227	$ 95,537
Accrued compensation	308,589	457,102
Accrued other liabilities	380,227	321,032
Accrued income and other taxes payable	128,734	184,844
Accrued professional costs	27,814	16,889
Customer liability, current	10,561	13,084
Accrued rent	11,953	14,847
Accrued expenses and other current liabilities	$ 928,105	$ 1,103,335

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Other Balance Sheet Accounts

3 Months Ended

Apr. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other Balance Sheet Accounts

Other Balance Sheet Accounts

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, net	$	44,342	$	35,528
Prepaid income taxes	21,362		21,514
Customer contract asset	10,492		16,620
Other taxes receivable	25,592		27,540
Prepaid expenses and other current assets	209,195		179,352
	$	310,983	$	280,554

Customer contract asset reflects future billings of amounts that are contractually committed by ExactTarget’s existing customers as of the acquisition date in July 2013 that will be billed in the next 12 months. As the Company bills these customers this balance will reduce and accounts receivable will increase.

Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $147,646 and $136,314, respectively	$	102,430	$	96,617
Acquired developed technology, net of accumulated amortization of $414,634 and $392,736, respectively	318,893		336,781
	$	421,323	$	433,398

Capitalized internal-use software amortization expense totaled $11.3 million and $8.3 million for the three months ended April 30, 2015 and 2014, respectively. Acquired developed technology amortization expense totaled $21.9 million and $30.4 million for the three months ended April 30, 2015 and 2014, respectively.

The Company capitalized $1.6 million and $1.0 million of stock-based expenses related to capitalized internal-use software development and deferred professional services during the three months ended April 30, 2015 and 2014, respectively.

Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	8,930	$	9,275
Long-term deposits	19,163		19,715
Purchased intangible assets, net of accumulated amortization of $150,963 and $130,968, respectively	317,565		329,971
Acquired intellectual property, net of accumulated amortization of $17,409 and $15,695, respectively	15,595		15,879
Strategic investments	318,716		175,774
Customer contract asset	407		1,447
Other	74,002		76,259
	$	754,378	$	628,320

Customer contract asset reflects future billings of amounts that were contractually committed by ExactTarget's existing customers as of the acquisition date in July 2013. As the Company bills these customers, this balance will decrease and accounts receivable will increase.

Purchased intangible assets amortization expense for the three months ended April 30, 2015 and 2014 was $20.0 million and $15.2 million, respectively. Acquired intellectual property amortization expense for the three months ended April 30, 2015 and 2014 was $1.7 million and $1.2 million, respectively.

Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Accounts payable	$	60,227	$	95,537
Accrued compensation	308,589		457,102
Accrued other liabilities	380,227		321,032
Accrued income and other taxes payable	128,734		184,844
Accrued professional costs	27,814		16,889
Customer liability, current	10,561		13,084
Accrued rent	11,953		14,847
	$	928,105	$	1,103,335

Customer liability reflects the legal obligation to provide future services that are contractually committed to ExactTarget’s existing customers but unbilled as of the acquisition date in July 2013. As these services are invoiced, this balance will decrease and deferred revenue will increase.

Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	106,499	$	94,396
Customer liability, noncurrent	288		1,026
Financing obligation, building in progress-leased facility	145,255		125,289
Long-term lease liabilities and other	618,009		701,612
	$	870,051	$	922,323

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Stockholders' Equity

3 Months Ended

Apr. 30, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

The Company maintains the following stock plans: the ESPP, the 2013 Equity Incentive Plan and the 2014 Inducement Equity Incentive Plan (the “2014 Inducement Plan”). The expiration of the 1999 Stock Option Plan (“1999 Plan”) in fiscal 2010 did not affect awards outstanding, which continue to be governed by the terms and conditions of the 1999 Plan. Offerings under the ESPP commenced in December 2011.

As of April 30, 2015, $70.5 million has been withheld on behalf of employees for future purchases under the ESPP and is recorded in accounts payable, accrued expenses and other liabilities.

Prior to February 1, 2006, options issued under the Company’s stock option plans generally had a term of 10 years. From February 1, 2006 through July 2013, options issued had a term of five years. After July 2013, options issued have a term of seven years.

Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	908,405		0		0.00
2014 Inducement Equity Incentive Plan	109,666		0		0.00
Options granted under all plans	(597,589	)	597,589		66.98
Restricted stock activity	(653,021	)	0		0.00
Stock grants to board and advisory board members	(53,817	)	0		0.00
Exercised	0		(3,365,914	)	33.54
Plan shares expired	(858,610	)	0		0.00
Canceled	782,733		(782,733	)	43.38
Balance as of April 30, 2015	30,427,305		25,907,303		$	46.32	$	686,590,080
Vested or expected to vest			24,031,621		$	45.64	$	653,176,385
Exercisable as of January 31, 2015			9,224,356		$	35.38	$	345,386,983

The total intrinsic value of the options exercised during the three months ended April 30, 2015 and 2014 was $113.3 million and $68.8 million, respectively. The intrinsic value is the difference between the current market value of the stock and the exercise price of the stock option.

The weighted-average remaining contractual life of vested and expected to vest options is approximately 4.4 years.

As of April 30, 2015, options to purchase 9,224,356 shares were vested at a weighted average exercise price of $35.38 per share and had a remaining weighted-average contractual life of approximately 2.6 years. The total intrinsic value of these vested options as of April 30, 2015 was $345.4 million.

The following table summarizes information about stock options outstanding as of April 30, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $27.56	3,757,745	2.9	$	22.85	2,777,045	$	22.62
$27.66 to $37.95	4,583,438	1.7	36.02		3,377,985	35.78
$38.03 to $52.14	3,020,285	3.0	39.94		1,484,315	39.65
52.30	4,602,478	5.6	52.30		1,392,231	52.30
$53.60 to $57.79	1,881,361	6.1	55.21		163,751	55.93
$59.34	6,747,253	6.6	59.34		0	0.00
$59.37 to $67.71	1,314,743	6.6	63.46		29,029	63.26
	25,907,303	4.5	$	46.32	9,224,356	$	35.38

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	1,072,962		0.001
Canceled	(1,011,129	)	0.001
Vested and converted to shares	(1,828,661	)	0.001
Balance as of April 30, 2015	21,377,180		$	0.001	$	1,556,686
Expected to vest	18,423,081				$	1,341,569

The restricted stock, which upon vesting entitles the holder to one share of common stock for each share of restricted stock, has an exercise price of $0.001 per share, which is equal to the par value of the Company’s common stock, and generally vests over 4 years.

The weighted-average grant date fair value of the restricted stock issued for the three months ended April 30, 2015 and 2014 was $67.17 and $63.71, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at April 30, 2015:

Options outstanding	25,907,303
Restricted stock awards and units outstanding	21,377,180
Stock available for future grant:
2013 Equity Incentive Plan	29,751,044
2014 Inducement Equity Incentive Plan	676,261
2004 Employee Stock Purchase Plan	2,849,312
Convertible senior notes	17,308,880
Warrants	17,308,880
	115,178,860

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Earnings/Loss Per Share

3 Months Ended

Apr. 30, 2015

Earnings Per Share [Abstract]

Earnings/Loss Per Share

Earnings/Loss Per Share

Basic earnings/loss per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the fiscal period. Diluted earnings/loss per share is computed by giving effect to all potential weighted average dilutive common stock, including options, restricted stock units, warrants and the convertible senior notes. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three months ended April 30, 2014 is the same as basic loss per share as there is a net loss in the period and inclusion of potentially issuable shares is anti-dilutive.

A reconciliation of the denominator used in the calculation of basic and diluted earnings/(loss) per share is as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Numerator:
Net income (loss)	$	4,092	$	(96,911	)
Denominator:
Weighted-average shares outstanding for basic loss per share	653,809		612,512
Effect of dilutive securities:
Convertible senior notes	0		0
Employee stock awards	10,501		0
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,310		612,512

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings/loss per share does not include the effect of the following potential outstanding common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted earnings/loss per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2015	2014
Stock awards	8,801	20,472
Convertible senior notes	17,309	30,662
Warrants	17,309	44,253

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Stockholders' Equity - Stock Options Outstanding (Detail) (USD $)	3 Months Ended
	Apr. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Number Outstanding	25,907,303
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	4 years 6 months
Weighted- Average Exercise Price, Options Outstanding	$ 46.32
Options Exercisable, Number of Shares	9,224,356
Options Exercisable, Weighted- Average Exercise Price	$ 35.38
$0.86 to $27.56
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 0.86
Range of Exercise Prices, Maximum	$ 27.56
Options, Number Outstanding	3,757,745
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	2 years 10 months 24 days
Weighted- Average Exercise Price, Options Outstanding	$ 22.85
Options Exercisable, Number of Shares	2,777,045
Options Exercisable, Weighted- Average Exercise Price	$ 22.62
$27.66 to $37.95
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 27.66
Range of Exercise Prices, Maximum	$ 37.95
Options, Number Outstanding	4,583,438
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	1 year 8 months 12 days
Weighted- Average Exercise Price, Options Outstanding	$ 36.02
Options Exercisable, Number of Shares	3,377,985
Options Exercisable, Weighted- Average Exercise Price	$ 35.78
$38.03 to $52.14
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 38.03
Range of Exercise Prices, Maximum	$ 52.14
Options, Number Outstanding	3,020,285
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	3 years
Weighted- Average Exercise Price, Options Outstanding	$ 39.94
Options Exercisable, Number of Shares	1,484,315
Options Exercisable, Weighted- Average Exercise Price	$ 39.65
52.30
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 52.30
Range of Exercise Prices, Maximum	$ 52.30
Options, Number Outstanding	4,602,478
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	5 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 52.30
Options Exercisable, Number of Shares	1,392,231
Options Exercisable, Weighted- Average Exercise Price	$ 52.30
$53.60 to $57.79
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 53.60
Range of Exercise Prices, Maximum	$ 57.79
Options, Number Outstanding	1,881,361
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 1 month 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 55.21
Options Exercisable, Number of Shares	163,751
Options Exercisable, Weighted- Average Exercise Price	$ 55.93
$59.34
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 59.34
Range of Exercise Prices, Maximum	$ 59.34
Options, Number Outstanding	6,747,253
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 59.34
Options Exercisable, Number of Shares	0
Options Exercisable, Weighted- Average Exercise Price	$ 0.00
$59.37 to $67.71
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 59.37
Range of Exercise Prices, Maximum	$ 67.71
Options, Number Outstanding	1,314,743
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 63.46
Options Exercisable, Number of Shares	29,029
Options Exercisable, Weighted- Average Exercise Price	$ 63.26

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Stockholders' Equity - Shares of Common Stock Available for Future Issuance under Stock Option Plans (Detail)	3 Months Ended
	Apr. 30, 2015	Jan. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	25,907,303	29,458,361
Restricted stock awards and units outstanding	21,377,180
Stock available for future grant	30,427,305	30,789,538
Convertible senior notes	17,308,880
Warrants (in shares)	17,308,880
Total shares available for future grant	115,178,860
2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant	29,751,044
2014 Inducement Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant	676,261
2004 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant	2,849,312

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Stockholders' Equity - Stock Activity (Detail) (USD $)	3 Months Ended
	Apr. 30, 2015
Shares available for grant
Shares Available for Grant, Balance	30,789,538
Shares Available for Grant, Options granted under all plans	(597,589)
Shares Available for Grant, Exercised	0
Shares Available for Grant, Expired	(858,610)
Shares Available for Grant, Cancelled	782,733
Shares Available for Grant, Balance	30,427,305
Outstanding Stock Options
Outstanding Stock Options, Balance	29,458,361
Outstanding Stock Options	597,589
Outstanding Stock Options, Exercised	(3,365,914)
Outstanding Stock Options, Plan shares expired	0
Outstanding Stock Options, Cancelled	(782,733)
Outstanding Stock Options, Balance	25,907,303
Outstanding Stock Options, Vested or expected to vest	24,031,621
Outstanding Stock Options, Exercisable	9,224,356
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Balance	$ 44.36
Weighted- Average Exercise Price, Options	$ 66.98
Weighted- Average Exercise Price, Exercised	$ 33.54
Weighted- Average Exercise Price, Cancelled	$ 43.38
Weighted- Average Exercise Price, Expired	$ 0.00
Weighted- Average Exercise Price, Balance	$ 46.32
Weighted- Average Exercise Price, Vested or expected to vest	$ 45.64
Weighted- Average Exercise Price, Exercisable	$ 35.38
Aggregate Intrinsic Value
Weighted- Average Exercise Price, Balance	$ 686,590,080
Weighted- Average Exercise Price, Vested or expected to vest	653,176,385
Weighted- Average Exercise Price, Exercisable	$ 345,386,983
Restricted Stock Activity
Shares available for grant
Shares Available for Grant, Restricted stock activity	(653,021)
Outstanding Stock Options
Outstanding Stock Options	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options	$ 0.00
Stock Grants To Board And Advisory Board Members
Shares available for grant
Shares Available for Grant, Stock grants to board and advisory board members	(53,817)
Outstanding Stock Options
Outstanding Stock Options	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options	$ 0.00
2013 Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	908,405
Shares Available for Grant, Balance	29,751,044
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options	$ 0.00
2014 Inducement Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	109,666
Shares Available for Grant, Balance	676,261
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options	$ 0.00

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Investments - Schedule of Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 978,556	$ 977,954
Unrealized Gains	2,955	5,182
Unrealized Losses	(991)	(969)
Fair Value	980,520	982,167
Corporate notes and obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	582,682	605,724
Unrealized Gains	1,887	3,031
Unrealized Losses	(327)	(481)
Fair Value	584,242	608,274
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	85,977	73,226
Unrealized Gains	162	257
Unrealized Losses	(12)	(1)
Fair Value	86,127	73,482
Mortgage backed obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	65,247	44,181
Unrealized Gains	142	159
Unrealized Losses	(554)	(415)
Fair Value	64,835	43,925
Asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	170,983	120,049
Unrealized Gains	142	131
Unrealized Losses	(76)	(43)
Fair Value	171,049	120,137
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	36,418	36,447
Unrealized Gains	98	115
Unrealized Losses	(19)	(25)
Fair Value	36,497	36,537
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	524	12,023
Unrealized Gains	17	278
Unrealized Losses	0	0
Fair Value	541	12,301
U.S. agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	15,832	19,488
Unrealized Gains	12	26
Unrealized Losses	(3)	(4)
Fair Value	15,841	19,510
Covered bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	20,893	66,816
Unrealized Gains	495	1,185
Unrealized Losses	0	0
Fair Value	$ 21,388	$ 68,001

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Debt - Schedule of Conversion of Senior Notes to Common Stock (Detail) (Convertible Debt, 0.25% Convertible Senior Notes due April 1, 2018, USD $)	3 Months Ended
	Apr. 30, 2015
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Instrument [Line Items]
Conversion Rate per $1,000 Par Value	0.0150512
Initial Conversion Price per Share	$ 66.44

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Summary of Business and Significant Accounting Policies (Tables)

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Revenues By Geographical Region

Revenues by geographical region are as follows (in thousands):

	Three Months Ended April 30,
	2015		2014
Americas	$	1,115,120	$	876,377
Europe	258,805		230,810
Asia Pacific	137,242		119,585
	$	1,511,167	$	1,226,772

Schedule Of Property And Equipment Estimated Useful Lives

Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows:

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years

Schedule Of Assumptions Used To Calculate Fair Value Of Options Granted

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share:

	Three Months Ended   April 30,
Stock Options	2015			2014
Volatility	37.4		%	37.0		%
Estimated life	3.6 years			3.5 years
Risk-free interest rate	1.13-1.36		%	1.20-1.39		%
Weighted-average fair value per share of grants	$	19.52		$	16.93

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Other Balance Sheet Accounts (Tables)

3 Months Ended

Apr. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, net	$	44,342	$	35,528
Prepaid income taxes	21,362		21,514
Customer contract asset	10,492		16,620
Other taxes receivable	25,592		27,540
Prepaid expenses and other current assets	209,195		179,352
	$	310,983	$	280,554

Schedule of Capitalized Software Costs

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $147,646 and $136,314, respectively	$	102,430	$	96,617
Acquired developed technology, net of accumulated amortization of $414,634 and $392,736, respectively	318,893		336,781
	$	421,323	$	433,398

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	8,930	$	9,275
Long-term deposits	19,163		19,715
Purchased intangible assets, net of accumulated amortization of $150,963 and $130,968, respectively	317,565		329,971
Acquired intellectual property, net of accumulated amortization of $17,409 and $15,695, respectively	15,595		15,879
Strategic investments	318,716		175,774
Customer contract asset	407		1,447
Other	74,002		76,259
	$	754,378	$	628,320

Schedule of Accrued Expenses and Other Current Liabilities

Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Accounts payable	$	60,227	$	95,537
Accrued compensation	308,589		457,102
Accrued other liabilities	380,227		321,032
Accrued income and other taxes payable	128,734		184,844
Accrued professional costs	27,814		16,889
Customer liability, current	10,561		13,084
Accrued rent	11,953		14,847
	$	928,105	$	1,103,335

Schedule of Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following (in thousands):

	As of
	April 30, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	106,499	$	94,396
Customer liability, noncurrent	288		1,026
Financing obligation, building in progress-leased facility	145,255		125,289
Long-term lease liabilities and other	618,009		701,612
	$	870,051	$	922,323

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Debt - Summary of Convertible Senior Notes (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015	Mar. 31, 2013
Debt Conversion [Line Items]
Convertible 0.25% senior notes, net	$ 1,076,727	$ 1,070,692
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Conversion [Line Items]
Par Value Outstanding	1,150,000
Equity Component Recorded at Issuance	122,421
Convertible 0.25% senior notes, net	$ 1,076,727	$ 1,070,692
Contractual interest rate	0.25%		0.25%

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Investments - Effect of Derivative Instruments Not Designated as Hedging Instruments on Condensed Consolidated Statements of Operations (Detail) (Derivatives not designated as hedging instruments, Foreign currency derivative contracts, Other income (expense), USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Derivatives not designated as hedging instruments | Foreign currency derivative contracts | Other income (expense)
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative Instruments Recognized in Income	$ 11,459	$ (12)

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Stock-based expenses	$ 142,560	$ 131,092
Loss on conversions of convertible senior notes	0	8,529
Cost of revenues
Amortization of purchased intangibles from business combinations	19,690	28,672
Stock-based expenses	15,381	11,810
Marketing and sales
Amortization of purchased intangibles from business combinations	20,027	14,965
Stock-based expenses	70,534	67,133
Research and development
Stock-based expenses	31,242	27,284
Other non-operating expense
Amortization of purchased intangibles from business combinations	815	0
General and administrative
Stock-based expenses	25,403	24,865
Notes Payable to Banks | 0.75% Convertible Senior Notes due January 2015
Loss on conversions of convertible senior notes		$ 8,500
Interest percentage of convertible senior notes		0.75%

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Property and Equipment

3 Months Ended

Apr. 30, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and Equipment

Property and equipment consisted of the following (in thousands):

	As of
	April 30, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	572,164			125,289
Computers, equipment and software	1,203,411			1,171,762
Furniture and fixtures	75,726			71,881
Leasehold improvements	394,674			376,761
	2,429,863			$	1,745,693
Less accumulated depreciation and amortization	(692,769		)	(619,827		)
	$	1,737,094		$	1,125,866

Depreciation and amortization expense totaled $72.5 million and $56.4 million during the three months ended April 30, 2015 and 2014, respectively.

Computers, equipment and software at April 30, 2015 and January 31, 2015 included a total of $737.8 million and $734.7 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $233.3 million and $206.7 million, respectively, at April 30, 2015 and January 31, 2015. Amortization of assets under capital leases is included in depreciation and amortization expense.

In April 2014, the Company entered into an agreement to sell 8.8 net acres of undeveloped real estate in San Francisco, California, and a portion of associated perpetual parking rights, for which the Company received a nonrefundable deposit in the amount of $30.0 million. As of April 30, 2015, these 8.8 net acres and perpetual parking rights met the criteria to be classified as held for sale. As a result, the Company classified this portion of the Company's land and building improvements, which totaled $137.7 million, and the perpetual parking rights of $5.5 million, net of $2.9 million reimbursed for property taxes and other items, as land and building improvements held for sale in the current assets section of the accompanying condensed consolidated balance sheets. The sale of this portion of the Company's undeveloped real estate is expected to close within twelve months and is subject to certain closing conditions. As of April 30, 2015, the fair value of the Company's land, building improvements and perpetual parking rights, based on the expected sale proceeds, exceeds the carrying value.

In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street (“350 Mission”) in San Francisco, California. The space rented is for the total office space available in the building, which is in the process of being constructed. As a result of the Company’s involvement during the construction period, the Company is considered for accounting purposes to be the owner of the construction project. As of April 30, 2015, the Company had capitalized $136.5 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding noncurrent financing obligation liability of $136.5 million. The financing obligation carrying value also includes $8.3 million of tenant improvement obligations offset by $0.4 million of imputed interest. The total expected financing obligation associated with this lease upon completion of the construction of the building, inclusive of the amounts currently recorded, is $335.8 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord in phases as the office space becomes ready for occupancy. In April 2015, the building was placed into service.

There was no impairment of long-lived assets during the three months ended April 30, 2015 and 2014, respectively.

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Other Balance Sheet Accounts - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Purchased intangible assets
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	$ 20.0	$ 15.2
Acquired intellectual property
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	1.7	1.2
Capitalized internal-use software development costs
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	11.3	8.3
Capitalized stock based compensation	1.6	1.0
Acquired developed technology
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	$ 21.9	$ 30.4

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Earnings/Loss Per Share - Shares Excluded from Diluted Earnings or Loss Per Share (Detail) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Stock Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	8,801	20,472
Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	17,309	30,662
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	17,309	44,253

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Stockholders' Equity (Tables)

3 Months Ended

Apr. 30, 2015

Equity [Abstract]

Schedule Of Stock Activity

Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	908,405		0		0.00
2014 Inducement Equity Incentive Plan	109,666		0		0.00
Options granted under all plans	(597,589	)	597,589		66.98
Restricted stock activity	(653,021	)	0		0.00
Stock grants to board and advisory board members	(53,817	)	0		0.00
Exercised	0		(3,365,914	)	33.54
Plan shares expired	(858,610	)	0		0.00
Canceled	782,733		(782,733	)	43.38
Balance as of April 30, 2015	30,427,305		25,907,303		$	46.32	$	686,590,080
Vested or expected to vest			24,031,621		$	45.64	$	653,176,385
Exercisable as of January 31, 2015			9,224,356		$	35.38	$	345,386,983

Schedule Of Stock Options Outstanding

The following table summarizes information about stock options outstanding as of April 30, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $27.56	3,757,745	2.9	$	22.85	2,777,045	$	22.62
$27.66 to $37.95	4,583,438	1.7	36.02		3,377,985	35.78
$38.03 to $52.14	3,020,285	3.0	39.94		1,484,315	39.65
52.30	4,602,478	5.6	52.30		1,392,231	52.30
$53.60 to $57.79	1,881,361	6.1	55.21		163,751	55.93
$59.34	6,747,253	6.6	59.34		0	0.00
$59.37 to $67.71	1,314,743	6.6	63.46		29,029	63.26
	25,907,303	4.5	$	46.32	9,224,356	$	35.38

Schedule Of Restricted Stock Activity

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	1,072,962		0.001
Canceled	(1,011,129	)	0.001
Vested and converted to shares	(1,828,661	)	0.001
Balance as of April 30, 2015	21,377,180		$	0.001	$	1,556,686
Expected to vest	18,423,081				$	1,341,569

Schedule Of Shares Of Common Stock Available For Future Issuance Under Stock Option Plans

The following number of shares of common stock were reserved and available for future issuance at April 30, 2015:

Options outstanding	25,907,303
Restricted stock awards and units outstanding	21,377,180
Stock available for future grant:
2013 Equity Incentive Plan	29,751,044
2014 Inducement Equity Incentive Plan	676,261
2004 Employee Stock Purchase Plan	2,849,312
Convertible senior notes	17,308,880
Warrants	17,308,880
	115,178,860

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Investments - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 30, 2015	Jan. 31, 2015
Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 843,700	$ 601,600
Recurring measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		68,001
Total Assets	1,088,266	1,299,248
Total Liabilities	2,581	5,694
Recurring measurement | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		0
Total Assets	40,432	13,983
Total Liabilities	0	0
Recurring measurement | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		68,001
Total Assets	1,047,834	1,285,265
Total Liabilities	2,581	5,694
Recurring measurement | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		0
Total Assets	0	0
Total Liabilities	0	0
Recurring measurement | Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	9,465	10,611
Recurring measurement | Prepaid expenses and other current assets | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Prepaid expenses and other current assets | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	9,465	10,611
Recurring measurement | Prepaid expenses and other current assets | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Accounts payable, accrued expenses and other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	2,581	5,694
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	2,581	5,694
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Time deposits | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	57,849	292,487
Recurring measurement | Time deposits | Cash and cash equivalents | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Time deposits | Cash and cash equivalents | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	57,849	292,487
Recurring measurement | Time deposits | Cash and cash equivalents | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Money market mutual funds | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	40,432	13,983
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	40,432	13,983
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Corporate notes and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	584,242	608,274
Recurring measurement | Corporate notes and obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Corporate notes and obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	584,242	608,274
Recurring measurement | Corporate notes and obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	86,127	73,482
Recurring measurement | U.S. treasury securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. treasury securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	86,127	73,482
Recurring measurement | U.S. treasury securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Mortgage backed obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	64,835	43,925
Recurring measurement | Mortgage backed obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Mortgage backed obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	64,835	43,925
Recurring measurement | Mortgage backed obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	171,049	120,137
Recurring measurement | Asset backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Asset backed securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	171,049	120,137
Recurring measurement | Asset backed securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	36,497	36,537
Recurring measurement | Municipal securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Municipal securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	36,497	36,537
Recurring measurement | Municipal securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	541	12,301
Recurring measurement | Foreign government obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Foreign government obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	541	12,301
Recurring measurement | Foreign government obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. agency obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	15,841	19,510
Recurring measurement | U.S. agency obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. agency obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	15,841	19,510
Recurring measurement | U.S. agency obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Covered bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	21,388
Recurring measurement | Covered bonds | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0
Recurring measurement | Covered bonds | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	21,388
Recurring measurement | Covered bonds | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 0

XML

Summary of Business and Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Fiscal Year

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2016, for example, refer to the fiscal year ending January 31, 2016.

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2015 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of cash flows for the three months ended April 30, 2015 and 2014, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2015 was derived from the audited consolidated financial statements that are included in the Company’s Form 10-K for the fiscal year ended January 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2015 Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K, and include all adjustments necessary for the fair presentation of the Company’s balance sheet as of April 30, 2015, and its results of operations, including its comprehensive loss, and its cash flows for the three months ended April 30, 2015 and 2014. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2015 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2016.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.

Significant estimates and assumptions made by management include the determination of:

• the best estimate of selling price of the deliverables included in multiple deliverable revenue arrangements,

• the fair value of assets acquired and liabilities assumed for business combinations,

• the recognition, measurement and valuation of current and deferred income taxes,

• the fair value of convertible notes,

• the fair value of stock awards issued and related forfeiture rates,

• the valuation of strategic investments and the determination of other-than-temporary impairments, and

• the assessment of determination of impairment of long-lived assets (property and equipment, goodwill and identified intangibles).

Actual results could differ materially from those estimates.

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segments

Segments

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is the chief executive officer, in deciding how to allocate resources and assessing performance. Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its offerings, presence and reach in various market segments of the enterprise cloud computing market. While the Company has offerings in multiple enterprise cloud computing market segments, the Company’s business operates in one operating segment because all of the Company's offerings operate on a single platform and are deployed in an identical way, andthe Company’s chief operating decision maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

Concentrations of Credit Risk and Significant Customers

Concentrations of Credit Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable. The Company maintains an allowance for doubtful accounts receivable balances. This allowance is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts.

Revenue Recognition

Revenue Recognition

The Company derives its revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing the Company’s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees.

The Company commences 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.

The Company’s 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 the Company’s 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 the Company’s 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 recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

The Company enters into arrangements with multiple deliverables that generally include multiple subscriptions, premium support and professional services. If the deliverables have standalone value upon delivery, the Company accounts for each deliverable separately. Subscription services have standalone value as such services are often sold separately. In determining whether professional services have standalone value, the Company considers the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription service start date and the contractual dependence of the subscription service on the customer’s satisfaction with the professional services work. To date, the Company has concluded that all of the professional services included in multiple deliverable arrangements executed have standalone value.

Multiple deliverables included in an arrangement are separated into different units of accounting and the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The Company determines the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (“VSOE”), if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. The amount of revenue allocated to delivered items is limited by contingent revenue, if any.

For certain professional services, the Company has established VSOE as a consistent number of standalone sales of these deliverables have been priced within a reasonably narrow range. The Company has not established VSOE for its subscription services due to lack of pricing consistency, the introduction of new services and other factors. Accordingly, the Company uses its BESP to determine the relative selling price for its subscription services.

The Company determines BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, its go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by the Company’s management, taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP.

Deferred Revenue

Deferred Revenue

The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above and is recognized as the revenue recognition criteria are met. The Company generally invoices customers in annual installments. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business linearity within the quarter.

Deferred revenue that will be recognized during the succeeding twelve month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent.

Deferred Commissions

Deferred Commissions

Deferred commissions are the incremental costs that are directly associated with non-cancelable subscription contracts with customers and consist of sales commissions paid to the Company’s direct sales force.

The commissions are deferred and amortized over the non-cancelable terms of the related customer contracts, which are typically 12 to 36 months. The commission payments are paid in full the month after the customer’s service commences. The deferred commission amounts are recoverable through the future revenue streams under the non-cancelable customer contracts. The Company believes this is the preferable method of accounting as the commission charges are so closely related to the revenue from the non-cancelable customer contracts that they should be recorded as an asset and charged to expense over the same period that the subscription revenue is recognized. Amortization of deferred commissions is included in marketing and sales expense in the accompanying condensed consolidated statements of operations.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value.

Marketable Securities

Marketable Securities

Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the condensed consolidated statements of comprehensive loss. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, the Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value and its intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of investment income.

Fair Value Measurement

Fair Value Measurement

The Company measures its cash equivalents, marketable securities and foreign currency derivative contracts at fair value.

The additional disclosures regarding the Company’s fair value measurements are included in Note 2 “Investments”.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows:

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from their respective accounts and any loss on such retirement is reflected in operating expenses.

Capitalized Internal-Use Software Costs

Capitalized Internal-Use Software Costs

The Company capitalizes costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable.

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Business Combinations

Business Combinations

The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations.

Leases and Asset Retirement Obligations

Leases and Asset Retirement Obligations

The Company categorizes leases at their inception as either operating or capital leases. In certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis once control of the space is achieved, without regard to deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.

The Company establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period of the operating expense.

The Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

The Company additionally has entered into subleases for unoccupied leased office space. Losses are recognized in the period the sublease is executed. Any sublease payments received in excess of the straight-line rent payments for the sublease are recorded in other income (expense).

Accounting for Stock-Based Compensation

Accounting for Stock-Based Expense

The Company recognizes stock-based expenses related to stock options and restricted stock awards on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of four years. The Company recognizes stock-based expenses related to shares issued pursuant to its 2004 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period, which is 12 months. Stock-based expenses are recognized net of estimated forfeiture activity. The estimated forfeiture rate applied is based on historical forfeiture rates. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option pricing model.

There were no stock purchase rights granted under the ESPP in the three months ended April 30, 2015 or 2014 as these stock purchase rights are only granted in June and December.

The Company estimated its future stock price volatility considering both its observed option-implied volatilities and its historical volatility calculations. Management believes this is the best estimate of the expected volatility over the expected life of its stock options and stock purchase rights.

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the condensed consolidated statement of operations in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.

The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, solely based on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision.

Foreign Currency Translation

Foreign Currency Translation

The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the condensed consolidated statements of comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates.

Warranties and Indemnification

Warranties and Indemnification

The Company’s enterprise cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

New Accounting Pronouncement

New Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. This standard establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. In April 2015, the FASB proposed a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, ASU 2014-09 will be effective for fiscal 2019, including interim periods within that reporting period. The Company is currently in the process of assessing the adoption methodology, which allows the amendment to be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial application. The Company is also evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.