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, 2016

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, 2016, there were approximately 677.5 million shares of the Registrant’s Common Stock outstanding.

INDEX

		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Consolidated Balance Sheets as of April 30, 2016 and January 31, 2016	3
	Consolidated Statements of Operations for the three months ended April 30, 2016 and 2015	4
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended April 30, 2016 and 2015	5
	Consolidated Statements of Cash Flows for the three months ended April 30, 2016 and 2015	6
	Notes to the Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	60
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	77

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

salesforce.com, inc.

Consolidated Balance Sheets

(in thousands)

	April 30, 2016			January 31, 2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,799,083		$	1,158,363
Short-term marketable securities	232,109			183,018
Accounts receivable, net	1,192,965			2,496,165
Deferred commissions	243,890			259,187
Prepaid expenses and other current assets	306,625			250,594
Total current assets	3,774,672			4,347,327
Marketable securities, noncurrent	1,684,260			1,383,996
Property and equipment, net	1,711,472			1,715,828
Deferred commissions, noncurrent	180,245			189,943
Capitalized software, net	407,030			384,258
Goodwill	4,129,656			3,849,937
Strategic investments	520,750			520,721
Other assets, net	409,185			370,910
Total assets	$	12,817,270		$	12,762,920
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	1,093,197		$	1,349,338
Deferred revenue	3,991,906			4,267,667
Total current liabilities	5,085,103			5,617,005
Convertible 0.25% senior notes, net	1,095,104			1,088,097
Loan assumed on 50 Fremont	198,066			197,998
Deferred revenue, noncurrent	15,008			23,886
Other noncurrent liabilities	839,725			833,065
Total liabilities	7,233,006			7,760,051
Stockholders’ equity:
Common stock	678			671
Additional paid-in capital	6,217,946			5,705,386
Accumulated other comprehensive loss	(28,577		)	(49,917		)
Accumulated deficit	(605,783		)	(653,271		)
Total stockholders’ equity	5,584,264			5,002,869
Total liabilities and stockholders’ equity	$	12,817,270		$	12,762,920

See accompanying Notes.

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salesforce.com, inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended April 30,
	2016			2015
Revenues:
Subscription and support	$	1,775,493		$	1,405,287
Professional services and other	141,110			105,880
Total revenues	1,916,603			1,511,167
Cost of revenues (1)(2):
Subscription and support	335,828			274,241
Professional services and other	161,153			107,561
Total cost of revenues	496,981			381,802
Gross profit	1,419,622			1,129,365
Operating expenses (1)(2):
Research and development	260,970			222,128
Marketing and sales	895,860			736,938
General and administrative	210,806			175,811
Operating lease termination resulting from purchase of 50 Fremont	0			(36,617		)
Total operating expenses	1,367,636			1,098,260
Income from operations	51,986			31,105
Investment income	8,122			4,561
Interest expense	(22,011		)	(16,675		)
Other expense (1)	(13,806		)	(918		)
Gains on sales of strategic investments	12,864			0
Income before benefit from (provision for) income taxes	37,155			18,073
Benefit from (provision for) income taxes	1,604			(13,981		)
Net income	$	38,759		$	4,092
Basic net income per share	$	0.06		$	0.01
Diluted net income per share	$	0.06		$	0.01
Shares used in computing basic net income per share	677,514			653,809
Shares used in computing diluted net income per share	686,799			664,310

_______________

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

	Three Months Ended April 30,
	2016		2015
Cost of revenues	$	22,215	$	19,690
Marketing and sales	15,386		20,027
Other non-operating expense	706		815

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

	Three Months Ended April 30,
	2016		2015
Cost of revenues	$	26,634	$	15,381
Research and development	35,168		31,242
Marketing and sales	95,474		70,534
General and administrative	31,643		25,403

See accompanying Notes.

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salesforce.com, inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2016		2015
Net income	$	38,759	$	4,092
Other comprehensive income (loss), before tax and net of reclassification adjustments:
Foreign currency translation and other gains (losses)	10,256		(1,855		)
Unrealized gains (losses) on investments	11,084		(2,389		)
Other comprehensive income (loss), before tax	21,340		(4,244		)
Tax effect	0		0
Other comprehensive income (loss), net of tax	21,340		(4,244		)
Comprehensive income (loss)	$	60,099	$	(152	)

See accompanying Notes.

5

salesforce.com, inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2016			2015
Operating activities:
Net income	$	38,759		$	4,092
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	132,772			127,927
Amortization of debt discount and transaction costs	7,185			5,861
Gains on sales of strategic investments	(12,864		)	0
50 Fremont lease termination	0			(36,617		)
Amortization of deferred commissions	88,514			77,155
Expenses related to employee stock plans	188,919			142,560
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net	1,307,312			979,170
Deferred commissions	(63,519		)	(50,092		)
Prepaid expenses and other current assets and other assets	(56,671		)	(11,274		)
Accounts payable, accrued expenses and other liabilities	(286,228		)	(239,072		)
Deferred revenue	(293,117		)	(264,629		)
Net cash provided by operating activities (1)	1,051,062			735,081
Investing activities:
Business combinations, net of cash acquired	(1,799		)	(12,470		)
Purchase of 50 Fremont land and building	0			(425,376		)
Deposit for purchase of 50 Fremont land and building	0			115,015
Non-refundable amounts received for sale of land available for sale	0			2,852
Strategic investments	(22,061		)	(144,462		)
Purchases of marketable securities	(589,336		)	(207,225		)
Sales of marketable securities	222,934			192,184
Maturities of marketable securities	23,285			14,446
Capital expenditures	(83,301		)	(71,087		)
Net cash used in investing activities	(450,278		)	(536,123		)
Financing activities:
Proceeds from employee stock plans	89,141			155,015
Principal payments on capital lease obligations	(49,968		)	(16,825		)
Payments on revolving credit facility and term loan	0			(300,000		)
Net cash provided by (used in) financing activities (1)	39,173			(161,810		)
Effect of exchange rate changes	763			(3,309		)
Net increase in cash and cash equivalents	640,720			33,839
Cash and cash equivalents, beginning of period	1,158,363			908,117
Cash and cash equivalents, end of period	$	1,799,083		$	941,956

(1) During the three months ended April 30, 2016, the Company early adopted Accounting Standards Update No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation. The Company has adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact for the three months ended April 30, 2015 to net cash provided by operating activities and net cash used in financing activities was $4,224.

See accompanying Notes.

6

salesforce.com, inc.

Consolidated Statements of Cash Flows

Supplemental Cash Flow Disclosure

(in thousands)

(unaudited)

	Three Months Ended April 30,
	2016		2015
Supplemental cash flow disclosure:
Cash paid during the period for:
Interest	$	23,750	$	4,252
Income taxes, net of tax refunds	$	7,909	$	10,581
Non-cash financing and investing activities:
Fixed assets acquired under capital leases	$	585	$	2,960
Building - leased facility acquired under financing obligation	$	1,676	$	19,966
Fair value of loan assumed on 50 Fremont	$	0	$	198,751
Fair value of equity awards assumed	$	11,449	$	0
Fair value of common stock issued as consideration for business combination	$	278,372	$	0

See accompanying Notes.

7

salesforce.com, inc.

Notes to 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 solutions, with a focus on customer relationship management, or CRM. The Company introduced its first CRM solution in February 2000, and has since expanded its service offerings with new editions, solutions, features and platform capabilities.

The Company's mission is to help its customers transform themselves into customer-centric companies by empowering them to connect with their customers in entirely new ways. The Company's Customer Success Platform, including sales force automation, customer service and support, marketing automation, community management, analytics, application development, Internet of Things integration and the Company's professional cloud services, provide the next-generation platform of enterprise applications and services to enable customer success.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ending January 31, 2017.

Basis of Presentation

The accompanying consolidated balance sheet as of April 30, 2016 and the consolidated statements of operations, the consolidated statements of comprehensive income (loss) and the consolidated statements of cash flows for the three months ended April 30, 2016 and 2015, respectively, are unaudited. The consolidated balance sheet data as of January 31, 2016 was derived from the audited consolidated financial statements that are included in the Company’s fiscal 2016 Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2016. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2016 Form 10-K.

The accompanying 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 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, 2016, and its results of operations, including its comprehensive income (loss), and its cash flows for the three months ended April 30, 2016 and 2015. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2016 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2017.

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 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 useful lives of intangible assets, property and equipment and building and structural components, and

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

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Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities.

Principles of Consolidation

The 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 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. 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, 2016 and January 31, 2016. No single customer accounted for five percent or more of total revenue during the three months ended April 30, 2016 and 2015.

Geographic Locations

As of April 30, 2016 and January 31, 2016, assets located outside the Americas were 11 percent of total assets.

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

	Three Months Ended April 30,
	2016		2015
Americas	$	1,413,229	$	1,115,120
Europe	327,854		258,805
Asia Pacific	175,520		137,242
	$	1,916,603	$	1,511,167

Americas revenue attributed to the United States was approximately 97 percent and 95 percent during the three months ended April 30, 2016 and 2015, respectively. No other country represented more than ten percent of total revenue during the three months ended April 30, 2016 and 2015.

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:

9

• 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 Company’s professional services contracts are either on a time and material or fixed fee 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.

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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 and 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. 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 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 consolidated statements of comprehensive income (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.”

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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:

Computers, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years
Building and structural components	Average weighted useful life of 32 years
Building- leased facility	27 years
Building improvements	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 and Intangible Assets 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.

Long-Lived Assets and Impairment Assessment

The Company evaluates long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset's carrying amount 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. There was no impairment of long-lived assets during the three months ended April 30, 2016 and 2015, respectively.

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 consolidated statements of operations.

In the event that the Company enters into a business combination with an entity in which the Company previously held a strategic investment, significant gains or losses will be disclosed separately within the statements of operations. 

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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 to operating expense.

In the event the Company is the deemed owner for accounting purposes during construction, 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 aggregate stock compensation remaining to be amortized to costs and expenses will be recognized over a weighted average period of 2.2 years.The Company recognizes stock-based expenses related to shares issued pursuant to its Amended and Restated 2004 Employee Stock Purchase Plan (“ESPP” or “2004 Employee Stock Purchase Plan”) 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	2016			2015
Volatility	32.1		%	37.4		%
Estimated life	3.5 years			3.6 years
Risk-free interest rate	0.9-1.0		%	1.13-1.36		%
Weighted-average fair value per share of grants	$	17.35		$	19.52

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. The estimated life for the stock options was based on an analysis of historical exercise activity.

ESPP assumptions and the related fair value per share table will only be disclosed in the three month period in which there is ESPP activity, such as an ESPP purchase. The Company's ESPP Plan allows for two purchases during the year. The estimated life of the ESPP will be based on the two purchase periods within each offering period.

The risk-free interest rate 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.

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 consolidated statement of operations in the period that includes the enactment date.

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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 consolidated statements of comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (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 material liabilities related to such obligations in the accompanying 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 Pronouncements Adopted

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. However, ASU 2015-03 does not address deferred issuance costs for line-of-credit arrangements; therefore, in August 2015, the FASB issued Accounting Standards Update No. 2015-15, “Interest-Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 allows an entity to defer debt issuance costs associated with line-of-credit arrangements, including arrangements with no outstanding borrowings, and classify them as an asset, and amortize them over the term of the arrangements. The recognition and measurement guidance for debt issuance costs is not affected by the standards. The Company adopted the standards in the three months ended April 30, 2016. Upon adoption, the unamortized debt issuance costs previously reported in Other assets, net, with a carrying amount of approximately $7.9 million at January 31, 2016, were reclassified and presented as a deduction of the corresponding liabilities, Convertible 0.25% senior notes, net and Loan assumed on 50 Fremont.

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In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments in business combinations. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The Company adopted this standard during the three months ending April 30, 2016 and there was no material impact of this on the Company's financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting” (“ASU 2016-09”) which simplifies and improves several aspects of the accounting for employee share-based payment transactions for public entities. The new guidance requires companies to record excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations when the awards vest or are settled, and eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the statement of cash flows. The Company early adopted the standard in the three months ended April 30, 2016.  Upon adoption, the Company recognized the previously unrecognized excess tax benefits using the modified retrospective transition method, which resulted in a cumulative-effect adjustment of $8.7 million to accumulated deficit. This adjustment reduced the April 30, 2016 accumulated deficit balance. The previously unrecognized excess tax effects were recorded as a deferred tax asset, which was fully offset by a valuation allowance. Without the valuation allowance, the Company’s deferred tax asset would have increased by $614.5 million. The Company also elected to apply the change in presentation to the statements of cash flows retrospectively and no longer classified the excess tax benefits from employee stock plans as a reduction from operating cash flows for all periods presented.   

Pending Accounting Pronouncements

In May 2014, the 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. The FASB deferred the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP for one year. 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 consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact to its consolidated financial statements.

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2. Investments

Marketable Securities

At April 30, 2016, 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	$	1,089,511	$	5,661	$	(1,277	)	$	1,093,895
U.S. treasury securities	221,467		783		(39		)	222,211
Mortgage backed obligations	125,778		213		(174		)	125,817
Asset backed securities	334,894		481		(190		)	335,185
Municipal securities	74,987		319		(86		)	75,220
Foreign government obligations	31,898		79		(3		)	31,974
U.S. agency obligations	32,058		20		(11		)	32,067
Total marketable securities	$	1,910,593	$	7,556	$	(1,780	)	$	1,916,369

At January 31, 2016, 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	$	949,266	$	1,398	$	(2,983	)	$	947,681
U.S. treasury securities	157,625		375		(56		)	157,944
Mortgage backed obligations	104,242		106		(323		)	104,025
Asset backed securities	271,292		186		(226		)	271,252
Municipal securities	44,934		209		(6		)	45,137
Foreign government obligations	18,014		42		(5		)	18,051
U.S. agency obligations	16,076		16		(6		)	16,086
Covered bonds	6,690		148		0			6,838
Total marketable securities	$	1,568,139	$	2,480	$	(3,605	)	$	1,567,014

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

	As of
	April 30, 2016		January 31, 2016
Recorded as follows:
Short-term (due in one year or less)	$	232,109	$	183,018
Long-term (due after one year)	1,684,260		1,383,996
	$	1,916,369	$	1,567,014

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As of April 30, 2016, 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	$	272,239	$	(813	)	$	61,847	$	(464	)	$	334,086	$	(1,277	)
U.S. treasury securities	47,552		(39		)	0		0			47,552		(39		)
Mortgage backed obligations	52,427		(126		)	8,986		(48		)	61,413		(174		)
Asset backed securities	106,226		(148		)	12,371		(42		)	118,597		(190		)
Municipal securities	18,065		(86		)	0		0			18,065		(86		)
Foreign government obligations	7,650		(3		)	0		0			7,650		(3		)
U.S. agency obligations	13,481		(11		)	0		0			13,481		(11		)
	$	517,640	$	(1,226	)	$	83,204	$	(554	)	$	600,844	$	(1,780	)

The unrealized losses for each of the fixed rate marketable securities were less than $98,000. 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, 2016. 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.

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The following table presents information about the Company’s assets and liabilities that are measured at fair value as of April 30, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	347,815	$	0	$	347,815
Money market mutual funds	868,519		0		0		868,519
Agency and sovereign paper	0		2,904		0		2,904
Marketable securities:
Corporate notes and obligations	0		1,093,895		0		1,093,895
U.S. treasury securities	0		222,211		0		222,211
Mortgage backed obligations	0		125,817		0		125,817
Asset backed securities	0		335,185		0		335,185
Municipal securities	0		75,220		0		75,220
Foreign government obligations	0		31,974		0		31,974
U.S. agency obligations	0		32,067		0		32,067
Foreign currency derivative contracts (2)	0		19,871		0		19,871
Total Assets	$	868,519	$	2,286,959	$	0	$	3,155,478
Liabilities
Foreign currency derivative contracts (3)	$	0	$	7,973	$	0	$	7,973
Total Liabilities	$	0	$	7,973	$	0	$	7,973

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of April 30, 2016, in addition to $579.8 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of April 30, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the consolidated balance sheet as of April 30, 2016.

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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, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	236,798	$	0	$	236,798
Money market mutual funds	216,107		0		0		216,107
Commercial paper	0		159,230		0		159,230
Agency and sovereign paper	0		13,599		0		13,599
Marketable securities:
Corporate notes and obligations	0		947,681		0		947,681
U.S. treasury securities	0		157,944		0		157,944
Mortgage backed obligations	0		104,025		0		104,025
Asset backed securities	0		271,252		0		271,252
Municipal securities	0		45,137		0		45,137
Foreign government obligations	0		18,051		0		18,051
U.S. agency obligations	0		16,086		0		16,086
Covered bonds	0		6,838		0		6,838
Foreign currency derivative contracts (2)	0		4,731		0		4,731
Total Assets	$	216,107	$	1,981,372	$	0	$	2,197,479
Liabilities
Foreign currency derivative contracts (3)	$	0	$	14,025	$	0	$	14,025
Total Liabilities	$	0	$	14,025	$	0	$	14,025

______________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31, 2016, in addition to $532.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of January 31, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying consolidated balance sheet as of January 31, 2016.

Derivative Financial Instruments

The Company enters into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk. 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, 2016 and January 31, 2016, the foreign currency derivative contracts that were not settled were recorded at fair value on the 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, 2016		January 31, 2016
Notional amount of foreign currency derivative contracts	$	1,513,108	$	1,274,515
Fair value of foreign currency derivative contracts	$	11,898	$	(9,294	)

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, 2016		January 31, 2016
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	19,871	$	4,731
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	7,973	$	14,025

The effect of the derivative instruments not designated as hedging instruments on the consolidated statements of operations during the three months ended April 30, 2016 and 2015, 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	2016			2015
Foreign currency derivative contracts	Other expense	$	(1,442	)	$	11,459

Strategic Investments

The Company's strategic investments are comprised of marketable equity securities and non-marketable debt and equity securities. Marketable equity securities are measured using quoted prices in their respective active markets and the non-marketable equity and debt securities are recorded at cost. These investments are presented on the consolidated balance sheets within strategic investments.

As of April 30, 2016, the Company had six investments in marketable equity securities with a fair value of $20.4 million, which includes an unrealized gain of $13.1 million. As of January 31, 2016, the Company had six investments in marketable equity securities with a fair value of $16.2 million, which included an unrealized gain of $8.5 million. The change in the fair value of the investments in publicly held companies is recorded in the consolidated balance sheets within strategic investments and accumulated other comprehensive loss.

The Company’s interest in non-marketable debt and equity securities consists of noncontrolling debt and equity 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, 2016 and January 31, 2016, the carrying value of the Company’s non-marketable debt and equity securities was $500.3 million and $504.5 million, respectively. The estimated fair value of the non-marketable debt and equity

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securities was approximately $706.9 million and $714.1 million as of April 30, 2016 and January 31, 2016, respectively. These investments are measured using the cost method of accounting, therefore the unrealized gains of $206.6 million and $209.6 million as of April 30, 2016 and January 31, 2016, respectively, are not recorded in the consolidated financial statements.

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,
	2016			2015
Interest income	$	7,773		$	3,049
Realized gains	1,054			2,128
Realized losses	(705		)	(616		)
Total investment income	$	8,122		$	4,561

Reclassification adjustments out of accumulated other comprehensive income (loss) into net income were immaterial for the three months ended April 30, 2016 and 2015, respectively.

3. Property and Equipment

Property and Equipment

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

	As of
	April 30, 2016			January 31, 2016
Land	$	183,888		$	183,888
Buildings and building improvements	618,510			614,081
Computers, equipment and software	1,321,660			1,281,766
Furniture and fixtures	85,327			82,242
Leasehold improvements	499,108			473,688
	$	2,708,493		$	2,635,665
Less accumulated depreciation and amortization	(997,021		)	(919,837		)
	$	1,711,472		$	1,715,828

Depreciation and amortization expense totaled $75.6 million and $72.5 million during the three months ended April 30, 2016 and 2015, respectively.

Computers, equipment and software at April 30, 2016 and January 31, 2016 included a total of $748.4 million and $747.1 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $335.5 million and $310.3 million, respectively, at April 30, 2016 and January 31, 2016. Amortization of assets under capital leases is included in depreciation and amortization expense.

Building - 350 Mission

In December 2013, 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, which is the total office space available in the building. 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 a result, the Company has capitalized the construction costs as Building with a corresponding current and noncurrent financing obligation liability and has accounted for the underlying land implicitly as an operating lease. As of April 30, 2016, the Company had capitalized $178.8 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $18.1 million and $202.2 million, respectively. As of January 31, 2016, the Company had capitalized $174.6 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $15.4 million and $196.7 million, respectively. The total

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expected financing obligation in the form of minimum lease payments inclusive of the amounts currently recorded, is $336.9 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord which commenced on October 2015. To the extent that operating expenses for 350 Mission are material, the Company, as the deemed accounting owner, will record the operating expenses.

4. Business Combinations

Steelbrick

In February 2016, the Company acquired the outstanding stock of SteelBrick, Inc. (“SteelBrick”), a next generation quote-to-cash platform, delivered 100 percent natively on the Salesforce platform, which offers applications, or apps, for automating the entire deal close process - from generating quotes and configuring orders to collecting cash. The Company has included the financial results of SteelBrick in the consolidated financial statements from the date of acquisition, which have not been material to date. The costs associated with the acquisition were not material.

The preliminary acquisition date fair value consideration transferred for SteelBrick was approximately $314.8 million, which consisted of the following (in thousands, except for share data):

	Fair Value
Cash	$	1,698
Common stock (4,288,447 shares)	278,372
Fair value of stock options and restricted stock awards assumed	10,989
Fair value of pre-existing relationship	23,726
Total	$	314,785

The fair value of stock options assumed by the Company was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.08 was applied to convert SteelBrick's outstanding equity awards for SteelBrick's common stock into equity awards for shares of the Company's common stock.

The Company had a $13.9 million, or approximately six percent, noncontrolling equity investment in SteelBrick prior to the acquisition. The acquisition date fair value of the Company's previously held equity interest was approximately $23.7 million and is included in the measurement of the consideration transferred. The Company recognized a gain of approximately $9.8 million as a result of remeasuring its prior equity interest in SteelBrick held before the business combination. The gain is included in gains on sales of strategic investments on the consolidated statement of operations.

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Fair Value
Cash and cash equivalents	$	59,296
Other current and noncurrent tangible assets	3,012
Customer contract asset, current and noncurrent	16,903
Intangible assets	49,160
Goodwill	217,986
Deferred revenue, current and noncurrent	(8,479		)
Customer liability, current and noncurrent	(9,949		)
Other liabilities, current and noncurrent	(2,665		)
Deferred tax liability	(10,479		)
Net assets acquired	$	314,785

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair values assigned to tangible assets acquired, liabilities assumed and identifiable intangible assets are based on management's estimates and assumptions. The deferred tax liability established was primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. The estimated fair values of assets acquired and liabilities assumed, specifically current and noncurrent income taxes payable and deferred taxes, may be subject to

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change as additional information is received and certain tax returns are finalized. Thus, the provisional measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition.

	Fair Value		Useful Life
Developed technology	$	30,700	4 years
Customer relationships	17,110		7 years
Other purchased intangible assets	1,350		1 year
Total intangible assets subject to amortization	$	49,160

The amount recorded for developed technology represents the estimated fair value of SteelBrick's quote-to-cash and billing technology. The amount recorded for customer relationships represents the fair values of the underlying relationship with SteelBrick customers. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities when integrating SteelBrick's quote-to-cash technology with the Company's other offerings. The majority of the goodwill balance is not deductible for U.S. income tax purposes.

The Company assumed unvested equity awards for shares of SteelBrick's common stock with a fair value of $39.6 million. Of the total consideration, $11.0 million was allocated to the consideration transferred and $28.6 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

MetaMind

In April 2016, the Company acquired MetaMind, Inc. (“MetaMind”) for approximately $32.8 million in cash, net of cash acquired. This amount includes amounts to be paid after an initial holdback period, and assumed equity awards. The primary reason for the acquisition was to extend the Company's intelligence in natural language processing and image recognition across all clouds. The Company has included the financial results of MetaMind in its consolidated financial statements from the date of acquisition, which have not been material to date. The costs associated with the acquisition were not material. In allocating the purchase consideration for MetaMind based on estimated fair values, the Company recorded $31.2 million of goodwill. The goodwill balance is not deductible for U.S. income tax purposes. The estimated fair values of assets acquired and liabilities assumed, specifically current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Thus, the provisional measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The Company assumed unvested equity awards for shares of MetaMind's common stock with a fair value of $5.5 million. Of the total consideration, $0.5 million was allocated to the purchase consideration and $5.0 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

The Company's chairman, who held a greater than ten percent ownership interest in MetaMind, received approximately $6.0 million in total proceeds, subject to customary escrow amounts, in connection with this acquisition.

Other Business Combinations

During the three months ended April 30, 2016, the Company acquired two other companies for an aggregate of $41.6 million in cash, net of cash acquired, and has included the financial results of these companies in its consolidated financial statements from the respective dates of acquisition. These transactions, individually and in the aggregate, are not material to the Company. The costs associated with these acquisitions were not material. The Company accounted for these transactions as business combinations. In allocating the purchase consideration for each company based on estimated fair values, the Company recorded $30.6 million of goodwill. The goodwill balance associated with these transactions is not deductible for U.S. income tax purposes. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

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5. Debt

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(in thousands)						April 30, 2016			January 31, 2016
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,095,104	(2)	$	1,088,097	(2)

___________ 

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

(2)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

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

24

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, 2016			January 31, 2016
Liability component :
Principal (1)	$	1,150,000		$	1,150,000
Less: debt discount, net (2)	(48,753		)	(54,941		)
Less: debt issuance cost (3)	(6,143		)	(6,962		)
Net carrying amount	$	1,095,104		$	1,088,097

(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 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.

(3)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

The total estimated fair value of the Company’s 0.25% Senior Notes at April 30, 2016 was $1.5 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 2017.

Based on the closing price of the Company’s common stock of $75.80 on April 29, 2016, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $162.0 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended April 30, 2016.

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% Senior 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% Senior Notes. The 0.25% Note Hedges are intended to reduce the potential economic dilution upon conversion of the 0.25% Senior Notes in the event that the market value per share of the Company’s common stock, as measured under the 0.25% Senior Notes, at the time of exercise is greater than the conversion price of the 0.25% Senior Notes. The 0.25% Note Hedges are separate transactions and are not part of the terms of the 0.25% Senior Notes. Holders of the 0.25% Senior 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.

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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% Senior Notes or the 0.25% Note Hedges. Holders of the 0.25% Senior Notes and 0.25% Note Hedges will not have any rights with respect to the 0.25% Warrants.

Revolving Credit Facility

Since October 2014, the Company maintains a 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”). 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, 2016.

There are currently no outstanding borrowings held under the Credit Facility as of April 30, 2016. The Company continues to pay a fee of 0.15% on the undrawn amount of the Credit Facility.

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 initially requires interest only payments. Beginning in fiscal year 2019, principal and interest payments are required, with the remaining principal due at maturity. For the three months ended April 30, 2016, total interest expense recognized was $1.9 million. 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, 2016.

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 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2016		2015
Contractual interest expense	$	2,814	$	3,350
Amortization of debt issuance costs	1,028		1,018
Amortization of debt discount	6,226		6,059
	$	10,068	$	10,427

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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, 2016		January 31, 2016
Prepaid income taxes	24,329		22,044
Other taxes receivable	28,117		27,341
Prepaid expenses and other current assets	254,179		201,209
	$	306,625	$	250,594

Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Capitalized internal-use software development costs, net of accumulated amortization of $201,292 and $186,251, respectively	$	131,376	$	123,065
Acquired developed technology, net of accumulated amortization of $505,147 and $481,118, respectively	275,654		261,193
	$	407,030	$	384,258

Capitalized internal-use software amortization expense totaled $15.0 million and $11.3 million for the three months ended April 30, 2016 and 2015, respectively. Acquired developed technology amortization expense totaled $24.0 million and $21.9 million for the three months ended April 30, 2016 and 2015, respectively.

The Company capitalized $1.8 million and $1.6 million of stock-based expenses related to capitalized internal-use software development for the three months ended April 30, 2016 and 2015, respectively.

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, 2016	$	3,849,937
Steelbrick	217,986
MetaMind	31,242
Other business combinations	30,554
Finalization of acquisition date fair values	(63		)
Balance as of April 30, 2016	$	4,129,656

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Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes, noncurrent, net	$	17,597	$	15,986
Long-term deposits	23,650		19,469
Purchased intangible assets, net of accumulated amortization of $228,704 and $212,248, respectively	267,722		258,580
Acquired intellectual property, net of accumulated amortization of $24,186 and $22,439, respectively	10,564		10,565
Other (1)	89,652		66,310
	$	409,185	$	370,910

(1) In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented, which resulted in an adjustment of $7.9 million to Other.

Purchased intangible assets amortization expense for the three months ended April 30, 2016 and 2015 was $16.5 million and $20.0 million, respectively. Acquired intellectual property amortization expense at both three months ended April 30, 2016 and 2015 was $1.7 million.

Accounts Payable, Accrued Expenses and Other Liabilities

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

	As of
	April 30, 2016		January 31, 2016
Accounts payable	$	54,583	$	71,481
Accrued compensation	386,410		554,502
Accrued other liabilities	433,631		454,287
Accrued income and other taxes payable	154,550		205,781
Accrued professional costs	30,095		33,814
Accrued rent	15,789		14,071
Financing obligation - leased facility, current (2)	18,139		15,402
	$	1,093,197	$	1,349,338

Other Noncurrent Liabilities

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

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes and income taxes payable	$	85,579	$	85,996
Financing obligation - leased facility (2)	202,246		196,711
Long-term lease liabilities and other	551,900		550,358
	$	839,725	$	833,065

(2) As of January 31, 2016, 350 Mission was in construction. In March 2016, construction was completed on the building.

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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.

As of April 30, 2016, $93.9 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.

During fiscal 2016, the Company granted a performance-based restricted stock unit award to the Chairman of the Board and Chief Executive Officer subject to vesting based on a performance-based condition and a service-based condition. At the end of the three year service period based on the Company's share price performance, as it relates to the performance condition, these performance-based restricted stock units will vest simultaneously.

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, 2016	46,879,908		26,258,798		$	56.26
Increase in shares authorized:
2013 Equity Incentive Plan	80,332
2014 Inducement Equity Incentive Plan	11,049
Assumed equity plans	584,392
Options granted under all plans	(867,292	)	867,292		40.58
Restricted stock activity	(1,821,324	)
Performance restricted stock units	0
Stock grants to board and advisory board members	(44,026	)
Exercised	0		(854,362	)	38.23
Plan shares expired	(28,916	)
Canceled	250,573		(250,573	)	67.73
Balance as of April 30, 2016	45,044,696		26,021,155		$	56.22	$	538,367,465
Vested or expected to vest			23,947,836		$	55.11	$	519,312,755
Exercisable as of April 30, 2016			10,372,672		$	43.12	$	338,995,305

The total intrinsic value of the options exercised during the three months ended April 30, 2016 and 2015 was $28.6 million and $113.3 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 4.7 years.

As of April 30, 2016, options to purchase 10,372,672 shares were vested at a weighted average exercise price of $43.12 per share and had a remaining weighted-average contractual life of approximately 3.3 years. The total intrinsic value of these vested options as of April 30, 2016 was $339.0 million.

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The following table summarizes information about stock options outstanding as of April 30, 2016:

	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 $37.95	4,461,075	2.3	$	27.45	3,691,607	$	28.16
$38.03 to $52.14	2,480,093	2.0	39.87		1,934,518	39.57
$52.30	3,684,201	4.6	52.30		2,012,682	52.30
$53.60 to $57.79	1,414,340	5.1	55.31		514,062	55.35
$59.34	6,138,145	5.6	59.34		2,015,280	59.34
$59.37 to $77.86	2,326,108	6.2	68.62		204,523	65.72
$80.99	5,517,193	6.6	80.99		0	0.00
	26,021,155	4.8	$	56.22	10,372,672	$	43.12

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2016	21,294,585		$	0.001
Granted- restricted stock units and awards	1,468,220		0.001
Canceled	(512,280	)	0.001
Vested and converted to shares	(1,840,948	)	0.001
Balance as of April 30, 2016	20,409,577		$	0.001	$	1,547,045,937
Expected to vest	17,223,868				$	1,305,569,194

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, 2016 and 2015 was $69.29 and $67.17, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at April 30, 2016:

Options outstanding	26,021,155
Restricted stock awards and units and performance stock units outstanding	20,409,577
Stock available for future grant:
2013 Equity Incentive Plan	44,462,309
2014 Inducement Equity Incentive Plan	446,533
Amended and Restated 2004 Employee Stock Purchase Plan	6,844,796
Acquired equity plans	135,854
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	132,937,984

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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, 2016, the Company reported a tax benefit of $1.6 million on a pretax income of $37.2 million, which resulted in a negative effective tax rate of 4 percent. The Company recorded a net tax benefit due to income taxes in profitable jurisdictions outside of the United States offset by a discrete tax benefit from a partial release of the valuation allowance in connection with certain acquisitions. The net deferred tax liability from the acquisitions provided a source of additional income to support the realizability of the Company's pre-existing deferred tax assets and as a result, the Company released a portion of its valuation allowance.

As described in Note 1 “Summary of Business and Significant Accounting Policies,” the Company early adopted ASU 2016-09 in the three months ended April 30, 2016. As a result of adopting ASU 2016-09 and the Company's current valuation allowance position, the Company did not record a current tax expense associated with the United States jurisdiction.

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 the United States.

Tax Benefits Related to Stock-Based Compensation

The income tax benefit related to stock-based compensation was $51.4 million and $43.7 million for three months ended April 30, 2016 and 2015, 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. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Canada, France, Switzerland and the United Kingdom. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. However, the outcome of the tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future. Based on the information to-date, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled or as applicable statute of limitations lapse, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $15.0 million may occur in the next 12 months.

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9. Earnings Per Share

Basic earnings per share is computed by dividing net income 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.

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

	Three Months Ended April 30,
	2016		2015
Numerator:
Net income	$	38,759	$	4,092
Denominator:
Weighted-average shares outstanding for basic income per share	677,514		653,809
Effect of dilutive securities:
Convertible senior notes	945		0
Employee stock awards	8,340		10,501
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted income per share	686,799		664,310

The weighted-average number of shares outstanding used in the computation of diluted earnings 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 per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2016	2015
Employee stock awards	21,321	8,801
Convertible senior notes	0	17,309
Warrants	17,309	17,309

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10. Commitments

Letters of Credit

As of April 30, 2016, the Company had a total of $83.8 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, 2016, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation -Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2017	$	50,960		$	287,083	$	14,518
Fiscal 2018	122,765			351,971		21,437
Fiscal 2019	115,797			299,254		21,881
Fiscal 2020	201,579			239,804		22,325
Fiscal 2021	37			223,280		22,770
Thereafter	0			1,233,948		233,927
Total minimum lease payments	491,138			$	2,635,340	$	336,858
Less: amount representing interest	(42,438		)
Present value of capital lease obligations	$	448,700

______________ 

(1) Total Financing Obligation, Building -Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of April 30, 2016, $220.3 million of the total obligation noted above was recorded to Financing obligation, building - leased facility, of which the current portion is included in "Accounts payable, accrued expenses and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the consolidated balance sheets.

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 $2.6 billion, approximately $2.3 billion is related to facilities space. The remaining commitment amount is related to computer equipment and furniture and fixtures.

Other Purchase Commitments

In April 2016, the Company entered into an agreement with a third party provider for certain infrastructure services for a period of four years. The agreement provides that the Company will pay $70.0 million in fiscal 2017, $96.0 million in fiscal 2018, $108.0 million in fiscal 2019 and $126.0 million in fiscal 2020.

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. 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 operating results or cash flows or both of a particular quarter. 

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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 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.

12. Related-Party Transactions

In January 1999, the Salesforce.com Foundation, also referred to as the Foundation, was chartered on an idea of leveraging the Company’s people, technology, and resources to help improve communities around the world. The Company calls this integrated philanthropic approach the 1-1-1 model. Beginning in 2008, Salesforce.org, which is a non-profit public 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 holds one of the three Foundation board seats. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of Salesforce.org’s nine 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 and Salesforce.org’s inception, the Company has provided at no charge certain resources to those entities employees such as office space, furniture, equipment, facilities, services, and other resources. The value of these items was approximately $0.8 million for the three months ended April 30, 2016.

The resource sharing agreement was amended in August 2015 to include resources outside of the United States and is more explicit about the types of resources that the Company will provide.

Additionally, the Company has donated subscriptions of the Company’s services to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain education entities. The Company does not charge Salesforce.org for these subscriptions, therefore revenue from subscriptions provided to non-profit organizations is donated back to the community through charitable grants made by the Foundation and Salesforce.org. The reseller agreement was amended in August 2015 to include additional customer segments and certain customers outside the U.S. and in October 2015 to add an addendum with model clauses for the processing of personal data transferred from the European Economic Area. The value of the subscriptions pursuant to reseller agreements was approximately $27.8 million for the three months ended April 30, 2016. The Company plans to continue these programs.

As described in Note 4 “Business Combinations,” the Company's chairman held an ownership interest in an acquisition that was completed by the Company during the three months ended April 30, 2016.

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

This Quarterly Report on Form 10-Q 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”). Words such as “expects,” “anticipates,” “aims,” “projects,” “intends,” “plans,” “believes,” “estimates,” “seeks,” “assumes,” “may,” “should,” “could,” “would,” “foresees,” “forecasts,” “predicts,” “targets,” variations of such words and similar expressions are intended to identify such forward-looking statements, which may consist of, among other things, trend analyses and statements regarding future events, future financial performance, anticipated growth and industry prospects. These forward-looking statements are based on current expectations, estimates and forecasts, as well as the beliefs and assumptions of our management, and are subject to risks and uncertainties that are difficult to predict, including 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; our service performance and security; the expenses associated with new data centers and third party infrastructure providers; additional data center capacity; real estate and office facilities space; our operating results; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow and 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; our reliance on third- party hardware, software and platform providers; the effect of evolving government regulations; the valuation of our deferred tax assets; the potential availability of additional tax assets in the future; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding convertible notes, revolving credit facility and loan associated with 50 Fremont; compliance with our debt covenants and capital lease obligations; and current and potential litigation involving us. These and other risks and uncertainties may cause our actual results to 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 additional detail regarding factors that may cause actual results to be different than those expressed in our 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 service offerings with new editions, solutions, features and platform capabilities.

Our mission is to help our customers transform themselves into customer-centric companies by empowering them to connect with their customers in entirely new ways. Our Customer Success Platform, including sales force automation, customer service and support, marketing automation, community management, analytics, application development, and Internet of Things (“IoT”) integration and our professional cloud services, provides the next-generation platform of enterprise applications, or apps, and services to enable customer success.

We believe that the convergence of cloud, social, mobile, data science and IoT technologies is fundamentally transforming how companies sell, service, market and innovate to connect with their customers. With our service offerings —Sales Cloud, Service Cloud, Marketing Cloud, Community Cloud, Analytics Cloud, IoT Cloud and App Cloud—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;

• expanding strategic relationships with customers;

• extending distribution into new and high-growth product categories;

• expanding our world-class sales organization;

• 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, the integration of acquired technologies, the expansion of our Marketing Cloud and App Cloud 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. As we continue with our growth plan and absent any one-time gains, we may continue to incur similar expenses in the future.

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 between eight and nine percent as of April 30, 2016. 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 46 percent and 49 percent for the three months ended April 30, 2016 and 2015, respectively, 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.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ending January 31, 2017.

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 consolidated financial statements.

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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, 2016. 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, 2016 and 2015.

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 billed on either a time and materials or fixed fee 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.

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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 consisted of the following by core service offering (in millions):

	Three Months Ended April 30,
	2016		2015		Variance- Percent
Sales Cloud	$	724.6	$	630.4	15%
Service Cloud	540.1		407.7		32%
App Cloud and Other	325.9		224.0		45%
Marketing Cloud	184.9		143.2		29%
Total	$	1,775.5	$	1,405.3

Subscription and support revenues from the Analytics Cloud, Communities Cloud and IoT Cloud were not significant for the three months ended April 30, 2016. The IoT cloud was launched in September 2015. Analytics Cloud revenue is included with App Cloud and Other in the table above. Community Cloud revenue is included in either Sales Cloud, Service Cloud or App Cloud 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 13 percent and 10 percent of our total subscription and support revenues for the three months ended April 30, 2016 and 2015, respectively, based on customers’ estimated product demand plans and these allocated amounts are included in the table above.

Additionally, some of our service offerings have similar features and functions. For example, customers may use the Sales Cloud, the Service Cloud or our App Cloud 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 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.

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 80 percent of the value of all subscription and support related invoices were issued with annual terms during the three months ended April 30, 2016 in comparison to 75 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 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

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displayed below (in thousands, except unbilled deferred revenue):

	April 30, 2016
Fiscal 2017
Accounts receivable, net	$	1,192,965
Deferred revenue, current and noncurrent	4,006,914
Operating cash flow (1)	1,051,062
Unbilled deferred revenue, a non-GAAP measure	7.6 bn

	April 30, 2015		July 31, 2015		October 31, 2015		January 31, 2016
Fiscal 2016
Accounts receivable, net	$	926,381	$	1,067,799	$	1,060,726	$	2,496,165
Deferred revenue, current and noncurrent	3,056,820		3,034,991		2,846,510		4,291,553
Operating cash flow (1)	735,081		304,278		162,514		470,208
Unbilled deferred revenue, a non-GAAP measure	6.0 bn		6.2 bn		6.7 bn		7.1 bn

	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)	482,128		239,078		123,732		336,506
Unbilled deferred revenue, a non-GAAP measure	4.8 bn		5.0 bn		5.4 bn		5.7 bn

(1) Operating cash flow represents net cash provided by operating activities for the three months ended in the periods stated above. In the first quarter of fiscal year 2017, we early adopted Accounting Standards Update No. 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation on the Statements of Cash Flows. We have adopted changes to the statement of cash flows on a retrospective basis and have accordingly updated the operating cash flow amounts presented above.

Unbilled Deferred Revenue, a Non-GAAP Measure

The GAAP deferred revenue balance on our consolidated balance sheets does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Unbilled deferred revenue is a non-GAAP operational measure that represents future billings under our subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. Unbilled deferred revenue amounts by quarter are reflected in the table above. 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.

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Cost of Revenues and Operating Expenses

Cost of Revenues. Cost of subscription and support revenues primarily consists of expenses related to delivering 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 increase the capacity that we are able to offer globally through data centers and third party infrastructure providers. 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 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.

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During the three months ended April 30, 2016, we recognized stock-based expense of $188.9 million. As of April 30, 2016, the aggregate stock compensation remaining to be amortized to costs and expenses was $1.6 billion. We expect this stock compensation balance to be amortized as follows: $490.1 million during the remaining nine months of fiscal 2017; $522.3 million during fiscal 2018; $378.5 million during fiscal 2019; $182.0 million during fiscal 2020 and $4.1 million during fiscal 2021. The expected amortization reflects only outstanding stock awards as of April 30, 2016 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 consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these 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.

We believe that of our significant accounting policies, which are described in the Notes to the accompanying consolidated financial statements, the following accounting estimates involve a greater degree of judgment and complexity. Accordingly, these are the estimates we believe are the most critical to aid in fully understanding and evaluating our 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

Our professional services contracts are either on a time and material or fixed fee 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.

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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 of our subscription services.

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 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 services 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, 2016, we deferred $63.5 million of commission expenditures and we amortized $88.5 million to sales expense. During the same period a year ago, we deferred $50.1 million of commission expenditures and we amortized $77.2 million to sales expense. Deferred commissions on our consolidated balance sheets totaled $424.1 million at April 30, 2016 and $449.1 million at January 31, 2016.

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.

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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.

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 net 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 relationships, 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.

In the event that we enter into a business combination with an entity in which we previously held a strategic investment, significant gains or losses are disclosed separately within the statements of operations. 

Goodwill and Intangibles. 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, discount 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 impact the amount and timing of future amortization expense.

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 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 or loss 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 evaluations of possible future transactions and may be subject to subsequent refinement or revision.

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

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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 hold strategic investments in marketable equity securities and non-marketable debt and equity securities in which we do not have a controlling interest or significant influence, as defined in Accounting Standards Codification 323 (“ASC 323”), Investments - Equity Method and Joint Ventures. Marketable equity securities are measured using quoted prices in their respective active markets and non-marketable debt and equity securities are recorded at cost and presented in the consolidated balance sheet. If, based on the terms of our ownership of these marketable and non-marketable securities, we determine that we exercise significant influence on the entity to which these marketable and non-marketable securities relate, we apply the requirements of ASC 323 to account for such investments.

We determine the fair value of our marketable equity securities and non-marketable debt and equity securities quarterly for impairment and disclosure purposes; however, the non-marketable debt and equity securities are recorded at fair value only if an impairment is recognized. The measurement of fair value requires significant judgment and includes a qualitative and quantitative analysis of events and circumstances that impact the fair value of the investment. Our assessment of the severity and duration of the impairment and qualitative and quantitative analysis includes the investee’s financial metrics, the investee’s products and technologies meeting or exceeding predefined milestones, market acceptance of the product or technology, other competitive products or technology in the market, general market conditions, management and governance structure of the investee, investee’s liquidity, debt ratios and the rate at which the investee is using its cash, and investee’s receipt of additional funding at a lower valuation. 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.

If the fair value of an investment is below our cost, we determine whether the investment is other-than-temporarily impaired based on our qualitative and quantitative analysis, which includes the severity and duration of the impairment. If the investment is considered to be other-than-temporarily impaired, we record the investment at fair value by recognizing an impairment and establishing a new cost basis for the investment.

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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,
	2016			2015
Revenues:
Subscription and support	$	1,775,493		$	1,405,287
Professional services and other	141,110			105,880
Total revenues	1,916,603			1,511,167
Cost of revenues (1)(2):
Subscription and support	335,828			274,241
Professional services and other	161,153			107,561
Total cost of revenues	496,981			381,802
Gross profit	1,419,622			1,129,365
Operating expenses (1)(2):
Research and development	260,970			222,128
Marketing and sales	895,860			736,938
General and administrative	210,806			175,811
Operating lease termination resulting from purchase of 50 Fremont	0			(36,617		)
Total operating expenses	1,367,636			1,098,260
Income from operations	51,986			31,105
Investment income	8,122			4,561
Interest expense	(22,011		)	(16,675		)
Other expense (1)	(13,806		)	(918		)
Gains on sales of strategic investments	12,864			0
Income before benefit from (provision for) income taxes	37,155			18,073
Benefit from (provision for) income taxes	1,604			(13,981		)
Net income	$	38,759		$	4,092

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

	Three Months Ended April 30,
	2016		2015
Cost of revenues	$	22,215	$	19,690
Marketing and sales	15,386		20,027
Other non-operating expense	706		815

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

	Three Months Ended April 30,
	2016		2015
Cost of revenues	$	26,634	$	15,381
Research and development	35,168		31,242
Marketing and sales	95,474		70,534
General and administrative	31,643		25,403

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Revenues by geography were as follows (in thousands):

	Three Months Ended April 30,
	2016		2015
Americas	$	1,413,229	$	1,115,120
Europe	327,854		258,805
Asia Pacific	175,520		137,242
	$	1,916,603	$	1,511,167

Americas revenue attributed to the United States was approximately 97 percent and 95 percent for the three months ended April 30, 2016 and 2015, respectively.

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

	Three Months Ended April 30,
	2016		2015
Revenues:
Subscription and support	93	%	93	%
Professional services and other	7		7
Total revenues	100		100
Cost of revenues (1)(2):
Subscription and support	18		18
Professional services and other	8		7
Total cost of revenues	26		25
Gross profit	74		75
Operating expenses (1)(2):
Research and development	14		15
Marketing and sales	46		49
General and administrative	11		11
Operating lease termination resulting from purchase of 50 Fremont	0		(2	)
Total operating expenses	71		73
Income from operations	3		2
Investment income	0		0
Interest expense	(1	)	(1	)
Other expense (1)	(1	)	0
Gains on sales of strategic investments	1		0
Income before benefit from (provision for) income taxes	2		1
Benefit from (provision for) income taxes	0		(1	)
Net income	2	%	0	%

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

	Three Months Ended April 30,
	2016		2015
Cost of revenues	1	%	1	%
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,
	2016		2015
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,
	2016		2015
Americas	74	%	74	%
Europe	17		17
Asia Pacific	9		9
	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, 2016 compared to Three Months Ended April 30, 2015	Three Months Ended April 30, 2015 compared to Three Months Ended April 30, 2014
Americas	27%	27%
Europe	33%	28%
Asia Pacific	29%	27%
Total growth	28%	27%

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, 2016 compared to April 30, 2015	January 31, 2016 compared to January 31, 2015
Deferred revenue, current and noncurrent constant currency growth rates
Total growth	32%	31%

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 of the most recent balance sheet date.

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Three Months Ended April 30, 2016 and 2015

Revenues.

	Three Months Ended April 30,				Variance
(in thousands)	2016		2015		Dollars		Percent
Subscription and support	$	1,775,493	$	1,405,287	$	370,206	26%
Professional services and other	141,110		105,880		35,230		33%
Total revenues	$	1,916,603	$	1,511,167	$	405,436	27%

Total revenues were $1.9 billion for the three months ended April 30, 2016, compared to $1.5 billion during the same period a year ago, an increase of $0.4 billion, or 27 percent. Subscription and support revenues were $1.8 billion, or 93 percent of total revenues, for the three months ended April 30, 2016, compared to $1.4 billion, or 93 percent of total revenues, during the same period a year ago, an increase of $370.2 million, or 26 percent. The increase in subscription and support revenues was primarily caused by volume-driven increases from new business, which includes new customers, upgrades and additional subscriptions from existing customers. Further, subscription revenues during the quarter benefited due to an additional day in the three months ended April 30, 2016 compared to the three months ended April 30, 2015. We continue to invest in a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped maintain our attrition rate. Our attrition rate, which is consistent as compared to the prior year, also played a role in the increase in subscription and support revenues. Changes in the net price per user per month have not been a significant driver of revenue growth for the periods presented. Professional services and other revenues were $141.1 million, or seven percent of total revenues, for the three months ended April 30, 2016, compared to $105.9 million, or seven percent of total revenues, for the same period a year ago, an increase of $35.2 million, or 33 percent. The increase in professional services and other revenues was due primarily to the higher demand for services from an increased number of customers.

Revenues in Europe and Asia Pacific accounted for $503.4 million, or 26 percent of total revenues, for the three months ended April 30, 2016, compared to $396.0 million, or 26 percent of total revenues, during the same period a year ago, an increase of $107.4 million, or 27 percent. The increase in revenues outside of the Americas was the result of the increasing acceptance of our services, our focus on marketing our services internationally and additional resources. Revenues outside of the Americas increased on a total dollar basis in the three months ended April 30, 2016 despite an overall strengthening of the U.S. dollar, which reduced aggregate international revenues by $18.7 million compared to the same period a year ago.

Cost of Revenues.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Subscription and support	$	335,828		$	274,241		$	61,587
Professional services and other	161,153			107,561			53,592
Total cost of revenues	$	496,981		$	381,802		$	115,179
Percent of total revenues	26		%	25		%

Cost of revenues was $497.0 million, or 26 percent of total revenues, for the three months ended April 30, 2016, compared to $381.8 million, or 25 percent of total revenues, during the same period a year ago, an increase of $115.2 million. The increase in absolute dollars was primarily due to an increase of $48.9 million in employee-related costs, an increase of $11.3 million in stock-based expenses, an increase of $32.0 million in service delivery costs, primarily due to our efforts to increase data center capacity, an increase of $8.2 million in professional and outside services and third party expenses, an increase of amortization of purchased intangible assets of $2.5 million and an increase in allocated overhead. We have increased our headcount by 10 percent since April 30, 2015 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. 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.

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The cost of professional services and other revenues was higher than the related revenue during the three months ended April 30, 2016 by $20.0 million as compared to $1.7 million during the same period a year ago. We expect the cost of professional services to continue to be more than 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
(in thousands)	2016			2015			Dollars
Research and development	$	260,970		$	222,128		$	38,842
Percent of total revenues	14		%	15		%

Research and development expenses were $261.0 million, or 14 percent of total revenues, for the three months ended April 30, 2016, compared to $222.1 million, or 15 percent of total revenues, during the same period a year ago, an increase of $38.8 million. The increase in absolute dollars was primarily due to an increase of approximately $29.0 million in employee-related costs, an increase of $3.9 million in stock-based expenses, an increase of $5.9 million in our development and test data center, and increases in allocated overhead. We increased our research and development headcount by seven percent since April 30, 2015 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 invest in additional employees and technology to support the development of new, and improve existing, technologies and the integration of acquired technologies.

Marketing and Sales.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Marketing and sales	$	895,860		$	736,938		$	158,922
Percent of total revenues	46		%	49		%

Marketing and sales expenses were $895.9 million, or 46 percent of total revenues, for the three months ended April 30, 2016, compared to $736.9 million, or 49 percent of total revenues, during the same period a year ago, an increase of $158.9 million. The change was primarily due to an increase of $108.8 million in employee-related costs and amortization of deferred commissions, an increase of $24.9 million in stock-based expenses, an increase of $22.7 million in advertising expenses and allocated overhead. This was offset by a decrease of $4.6 million related to the amortization of purchased intangible assets. Our marketing and sales headcount increased by six percent since April 30, 2015. 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.

General and Administrative.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
General and administrative	$	210,806		$	175,811		$	34,995
Percent of total revenues	11		%	11		%

General and administrative expenses were $210.8 million, or 11 percent of total revenues, for the three months ended April 30, 2016, compared to $175.8 million, or 11 percent of total revenues, during the same period a year ago, an increase of $35.0 million. The increase was primarily due to an increase of $25.8 million in employee-related costs and an increase of $6.2 million in stock-based expenses. Our general and administrative headcount increased by five percent since April 30, 2015 as we added personnel to support our growth.

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Operating lease termination resulting from purchase of 50 Fremont.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Operating lease termination resulting from purchase of 50 Fremont	$	0		$	(36,617	)	$	36,617
Percent of total revenues	0		%	(2		)%

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 February 2015 purchase, we recognized a net non-cash gain totaling approximately $36.6 million on the termination of the lease signed in January 2012.

Income from operations.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Income from operations	$	51,986		$	31,105		$	20,881
Percent of total revenues	3		%	2		%

Income from operations for the three months ended April 30, 2016 was $52.0 million and included $188.9 million of stock-based expenses and $37.6 million of amortization of purchased intangibles. During the same period a year ago, income from operations was $31.1 million and included a gain of $36.6 million related to the purchase of 50 Fremont, $142.6 million of stock-based expenses and $39.7 million of amortization of purchased intangibles. The increase in income from operations is primarily due to a higher revenue growth rate compared to costs and operating expense growth rates.

Investment income.

	Three Months Ended April 30,				Variance
(in thousands)	2016		2015		Dollars
Investment income	$	8,122	$	4,561	$	3,561

Investment income consists of income on our cash and marketable securities balances. Investment income was $8.1 million for the three months ended April 30, 2016 and was $4.6 million during the same period a year ago. The increase was primarily due to earnings on higher cash and marketable securities balances.

Interest expense.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Interest expense	$	(22,011	)	$	(16,675	)	$	(5,336	)
Percent of total revenues	(1		)%	(1		)%

Interest expense consists of interest on our convertible senior notes, capital leases, term loan, financing obligation related to 350 Mission and revolving credit facility. Interest expense, net of interest costs capitalized, was $22.0 million for the three months ended April 30, 2016 and was $16.7 million during the same period a year ago.

Other expense.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Other expense	$	(13,806	)	$	(918	)	$	(12,888	)

Other expense primarily consists of non-operating costs such as strategic investments fair market value adjustments, foreign exchange rate fluctuations and real estate transactions.

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Gain on sales of strategic investments.

	Three Months Ended April 30,				Variance
(in thousands)	2016		2015		Dollars
Gains on sales of strategic investments	$	12,864	$	0	$	12,864

Gains on sales of strategic investments were $12.9 million for the three months ended April 30, 2016. Gains on sales of strategic investments primarily consist of significant gains on sales of strategic investments resulting from mergers and acquisitions that we initiated in which we previously held an equity interest.

Benefit from (provision for) income taxes.

	Three Months Ended April 30,						Variance
(in thousands)	2016			2015			Dollars
Benefit from (provision for) income taxes	$	1,604		$	(13,981	)	$	15,585
Effective tax rate	(4		)%	77		%

We recognized a tax benefit of $1.6 million on a pretax income of $37.2 million, which resulted in a negative effective tax rate of 4 percent for the three months ended April 30, 2016. We recorded a net tax benefit due to income taxes in profitable jurisdictions outside the United States, which was offset by a discrete tax benefit from a partial release of the tax valuation allowance in connection with certain acquisitions. The net deferred tax liability from the acquisitions provided a source of additional income to support the realizability of our pre-existing deferred tax assets, and as a result, a portion of the valuation allowance was released. Additionally, as a result of early adopting ASU 2016-09 and our valuation allowance position, we did not record any U.S. current expense.

We recorded a tax provision of $14.0 million with 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 due to income taxes in profitable jurisdictions outside the United States.

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Liquidity and Capital Resources

At April 30, 2016, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $3.7 billion and accounts receivable of $1.2 billion.

Net cash provided by operating activities was $1.1 billion during the three months ended April 30, 2016 and $735.1 million during the same period a year ago. Cash provided by operating activities has historically been affected by the amount of net income 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 the termination of 50 Fremont lease; the expense associated with stock-based awards; gains on sales of strategic investments; the timing of employee related costs including commissions and bonus payments; the timing of payments against accounts payable, accrued expenses and other current liabilities; the timing of collections from our customers, which is our largest source of operating cash flows; and changes in working capital accounts. As a result of the early adoption of ASU 2016-09, the benefit to cash flows from operating activities due to no longer reducing operating cash flow by the excess tax benefits in the three months ended April 30, 2016 was approximately $25.0 million.

Our working capital accounts consist of accounts receivable, deferred commissions, prepaid assets and other current assets. Claims against working capital include accounts payable, accrued expenses, deferred revenue, 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 such as billings to customers for subscriptions and support services and the subsequent collection of those billings, certain amounts and timing of which are seasonal.

As described above in “Seasonal Nature of Deferred Revenue, Accounts Receivable and Operating Cash Flow,” 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.

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 is our largest collections and operating cash flow quarter.

Net cash used in investing activities was $450.3 million during the three months ended April 30, 2016 and $536.1 million during the same period a year ago. The net cash used in investing activities during the three months ended April 30, 2016 primarily related to strategic investments and capital expenditures including new office build-outs and investment of cash balances offset by sales and maturities of marketable securities.

Net cash provided by financing activities was $39.2 million during the three months ended April 30, 2016 as compared to net cash used in financing activities of $161.8 million during the same period a year ago. Net cash provided by financing activities during the three months ended April 30, 2016 consisted primarily of $50.0 million of principal payments on capital leases, offset by $89.1 million from proceeds from equity plans and the netting of excess tax benefits from employee stock plans to cash flows from operating activities due to the early adoption of ASU 2016-09.

The 0.25% Senior 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 0.25% Senior Notes. The 0.25% Senior Notes have not yet been convertible at the holders’ option. The 0.25% Senior Notes are classified as a noncurrent liability on our consolidated balance sheet as of April 30, 2016. Our common stock did not trade at a price exceeding 130% of the conversion price of $66.44 per share applicable to the 0.25% Senior Notes during the fiscal quarter ended April 30, 2016. Accordingly, the 0.25% Senior Notes were not convertible at the holders’ option for the quarter ending April 30, 2016.

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,

52

subject to certain conditions, and amounts repaid or prepaid may be reborrowed. As of April 30, 2016, we had no outstanding borrowings under the Credit Facility.

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, 2016.

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.

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. For the three months ended April 30, 2016, total interest expense we recognized was $1.9 million.

In April 2016, we entered into an agreement with a third party provider for certain infrastructure services for a period of four years. The agreement provides that we will pay $70.0 million in fiscal 2017, $96.0 million in fiscal 2018, $108.0 million in fiscal 2019 and $126.0 million in fiscal 2020.

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, 2016, we have a total of $83.8 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, 2016, the future non-cancelable minimum payments under these commitments were as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation - Leased Facility
Fiscal Period:
Remaining nine months of fiscal 2017	$	50,960		$	287,083	$	14,518
Fiscal 2018	122,765			351,971		21,437
Fiscal 2019	115,797			299,254		21,881
Fiscal 2020	201,579			239,804		22,325
Fiscal 2021	37			223,280		22,770
Thereafter	0			1,233,948		233,927
Total minimum lease payments	491,138			$	2,635,340	$	336,858
Less: amount representing interest	(42,438		)
Present value of capital lease obligations	$	448,700

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, 2016, $220.3 million of the total obligation noted above was recorded to Financing obligation, building - leased facility, which the current portion is included in "Accounts payable, accrued

53

expenses and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the consolidated balance sheets.

In February 2016, the Company entered into an agreement to sublease additional office space in New York, New York. The amounts associated with the agreement will be approximately $288.0 million over the approximately 12 year term of the agreement, beginning in the Company's first quarter of fiscal 2018. In May 2016, the Company entered into an agreement to lease additional office space in Indianapolis, Indiana. The amounts associated with the agreement will be approximately $77.0 million over the approximately 13 year term of the agreement, beginning in the Company's second quarter of fiscal 2018.

During the remaining months of fiscal 2017 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.

New Accounting Pronouncements

See Note 1 “Summary of Business and Significant Accounting Policies” to the consolidated financial statements for our discussion about new accounting pronouncements adopted and those pending.

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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 net income, non-GAAP gross profit, non-GAAP operating profit, non-GAAP free cash flow, and non-GAAP earnings per share each meet the definition of a non-GAAP financial measure. The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash or non-recurring items on the company’s operating performance and to enable investors to evaluate the company’s results in the same way management does. These non-cash or non-recurring items generally consist of one-time items resulting from strategic decisions that affect multiple periods or periods unrelated to when the actual items were incurred. Management believes that supplementing GAAP disclosure with non-GAAP disclosure that excludes items that are not directly related to performance in any particular period provides investors with a more complete view of the company’s operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the company’s business. Further, to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the company’s relative performance against other companies that also report non-GAAP operating results.

Non-GAAP net income

We define non-GAAP net income as our total net income excluding the components described below, which we believe are not reflective of our core, ongoing operating results. 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 we do, in comparing financial results across accounting periods and to those of peer companies and in better understanding the impact of these items on our gross margin and operating performance.

• 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.

• 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 its core, 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.

• Gains on Sales of Strategic Investments. The Company views gains on sales of its strategic investments resulting from acquisitions initiated by the Company in which an equity interest was previously held as discrete events and not indicative of operational performance during any particular period. Management believes that the exclusion of these 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.

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• Income Tax Effects and Adjustments. The Company utilizes 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 can vary in size and frequency. When projecting this long-term rate, the Company evaluated a three-year financial projection that excludes the direct impact of the following non-cash items: stock-based expenses, amortization of purchased intangibles, amortization of acquired leases, amortization of debt discount, gains/losses on the sales of land and building improvements, gains/losses on conversions of debt, gains on sales of strategic investments and termination of office leases. The projected rate also assumes no new acquisitions in the three-year period, and considers other factors including the Company’s tax structure, its tax positions in various jurisdictions and key legislation in major jurisdictions where the company operates. This long-term rate could be subject to change for a variety of reasons, such as significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the company operates. 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. The non-GAAP tax rate for fiscal 2017 is 35.0 percent, and was 35.5 percent for fiscal 2016.

Additionally, as significant, unusual or discrete events occur, or as other events occur that are not related to the Company’s core, ongoing operating results, we may exclude the financial results of these events from non-GAAP net income in the period in which such events occur. For example, we could in the future recognize a significant gain or loss in connection with one or more of our strategic investments, which may not be viewed by management as reflective of our core, ongoing operating results. Similarly, the financial effects of significant facilities-related transactions may in the future be excluded from non-GAAP net income in the period in which such events may occur, if they are not viewed by management as reflective of our core, ongoing operating results.

Non-GAAP gross profit

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

Non-GAAP operating profit

We define non-GAAP operating profit as our non-GAAP gross profit less operating expenses, as reported on our 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

We define non-GAAP earnings per share as our non-GAAP net income divided by basic or diluted shares outstanding.

Non-GAAP free cash flow

We define the non-GAAP measure free cash flow as GAAP net cash provided by operating activities, less capital expenditures. For this purpose, capital expenditures does not include our strategic investments, nor does it include any costs or activities related to our purchase of 50 Fremont land and building, and building - leased facilities.

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, non-GAAP earnings per share and non-GAAP free cash flow 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, non-GAAP earnings per share and non-GAAP free cash flow 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 our non-GAAP financial measures 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.

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Our reconciliation of the non-GAAP financial measures to the most comparable GAAP measures for the three months ended April 30, 2016 and 2015 are as follows (in thousands, except for share numbers):

	Three Months Ended April 30,
	2016		2015
Non-GAAP gross profit
GAAP gross profit	$	1,419,622	$	1,129,365
Plus:
Amortization of purchased intangibles	22,215		19,690
Stock-based expense	26,634		15,381
Non-GAAP gross profit	$	1,468,471	$	1,164,436

	Three Months Ended April 30,
	2016		2015
Non-GAAP income from operations
GAAP income from operations	$	51,986	$	31,105
Plus:
Amortization of purchased intangibles	37,601		39,717
Stock-based expense	188,919		142,560
Less:
Operating lease termination resulting from purchase of 50 Fremont	0		(36,617		)
Non-GAAP income from operations	$	278,506	$	176,765

	Three Months Ended April 30,
	2016			2015
Non-GAAP net income
GAAP net income	$	38,759		$	4,092
Plus:
Amortization of purchased intangibles	37,601			39,717
Amortization of acquired lease intangible	706			815
Stock-based expense	188,919			142,560
Amortization of debt discount, net	6,226			6,059
Less:
Operating lease termination resulting from purchase of 50 Fremont	0			(36,617		)
Gains on sales of strategic investments	(12,864		)	0
Income tax effects and adjustments	(91,814		)	(48,291		)
Non-GAAP net income	$	167,533		$	108,335

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	Three Months Ended April 30,
	2016			2015
Non-GAAP diluted earnings per share
GAAP diluted income per share	$	0.06		$	0.01
Plus:
Amortization of purchased intangibles	0.05			0.06
Amortization of acquired lease intangible	0.00			0.00
Stock-based expenses	0.28			0.21
Amortization of debt discount, net	0.01			0.01
Less:
Operating lease termination resulting from purchase of 50 Fremont	0.00			(0.06		)
Gains on sales of strategic investments	(0.02		)	0.00
Income tax effects and adjustments of Non-GAAP items	(0.14		)	(0.07		)
Non-GAAP diluted earnings per share	$	0.24		$	0.16
Shares used in computing diluted net income per share	686,799			664,310

Non-GAAP net income for the quarter ended April 30, 2016 was $167.5 million and $108.3 million for the same period a year ago, an increase of $59.2 million or 55 percent. During fiscal 2017 we remained focused on improving non-GAAP operating profit and expect to remain similarly focused for the remaining nine months of fiscal 2017.

	Three Months Ended April 30,
Free cash flow analysis	2016			2015
Operating cash flow (1)
GAAP net cash provided by operating activities	$	1,051,062		$	735,081
Less:
Capital expenditures	(83,301		)	(71,087		)
Free cash flow	$	967,761		$	663,994

(1) During the three months ended April 30, 2016, the Company early adopted ASU 2016-09. As a result, excess tax benefits are no longer classified as a reduction of operating cash flow. For more information, refer to Note 1 in the notes to the consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

We primarily conduct our business in the following locations: the United States, Europe, Canada, Asia Pacific and Japan. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, additional headcount in foreign countries, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar and Japanese Yen against the United States Dollar. These exposures may change over time as business practices evolve and economic conditions change. Changes in foreign currency exchange rates could have an adverse impact on our financial results and cash flows. For example, revenue for the first quarter of fiscal 2017 was $1.9 billion, an increase of 27 percent year over year, and 28 percent in constant currency. Deferred revenue on the balance sheet as of April 30, 2016 was $4.01 billion, an increase of 31 percent year over year, and 32 percent in constant currency.

Foreign Currency Transaction Risk

Our foreign currency exposures typically arise from selling annual and multi-year subscriptions in multiple currencies, customer trade account receivables, intercompany transfer pricing arrangements and other intercompany transactions. Our foreign currency management objective is to minimize the effect of fluctuations in foreign exchange rates on selected assets or liabilities without exposing us to additional risk associated with transactions that could be regarded as speculative.

We pursue our objective by utilizing foreign currency forward contracts to offset foreign exchange risk. Our foreign currency forward contracts are generally short-term in duration. We neither use these foreign currency forward contracts for

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trading purposes nor do we currently designate these forward contracts as hedging instruments pursuant to Accounting Standards Codification 815 (“ASC 815”), Derivatives and Hedging. Accordingly, we record the fair values of these contracts as of the end of our reporting period to our consolidated balance sheet with changes in fair values recorded to our consolidated statement of operations. Given the short duration of the forward contracts, the amount recorded is not significant. Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross-currency transactions that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized gain or loss on our foreign currency forward contracts and other factors.

Foreign Currency Translation Risk

Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenues, operating expense and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars. As the U.S. Dollar strengthened against certain international currencies over the past several months, the amounts of revenue and deferred revenue that we reported in U.S. Dollars for foreign subsidiaries that transact in international currencies were lower relative to what we would have reported using a constant currency rate. We report in Management's Discussion and Analysis our revenue and deferred revenue growth rates on both an absolute dollar and constant currency basis.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $3.7 billion at April 30, 2016. 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, 2016 could result in a $29.1 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, 2016, we had cash, cash equivalents and marketable securities totaling $2.7 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 $20.9 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”) due April 1, 2018. 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 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, 2016. The total estimated fair value of our Notes at April 30, 2016 was $1.5 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 2017, which was $126.22.

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

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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, 2016 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, 2016.

We deposit our cash with multiple financial institutions.

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, which range from early-stage companies to more mature companies with established revenue streams and business models. Our investments in privately held companies are primarily in preferred stock of the respective investees and therefore provide us with liquidation preferences in the event there are certain liquidation events. 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 debt and equity 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 150 privately held companies, primarily comprised of independent software vendors and system integrators. We invest in early-to-late stage enterprise cloud companies for strategic reasons and to support key business initiatives to grow our ecosystem of partners and accelerate the adoption of cloud technologies. We invest in both domestic and international companies and currently hold investments in all of our regions: the Americas, Europe, and Asia Pacific. Our investments in these companies range from $0.2 million to over $70.0 million, with 13 investments individually equal to or in excess of $10 million. As of April 30, 2016 and January 31, 2016 the carrying value of our investments in privately held companies was $500.3 million and $504.5 million, respectively. The estimated fair value of our investments in privately held companies was $706.9 million and $714.1 million as of April 30, 2016 and January 31, 2016, respectively. The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition or other favorable market event 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 that is other than temporary, which could be material. We have in the past written off the full value of specific investments. Similar situations could occur in the future and negatively impact our financial results. All of our investments are subject to a risk of partial or 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 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

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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 and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

During fiscal 2015, we received a communication from a large technology company alleging that we infringed certain of its patents. 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 our financial condition, but it could be material to operating results 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 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

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

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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.

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, and experienced disruptions to, our services and new defects or disruptions may occur 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.

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. We have from time to time experienced interruptions in our services and such interruptions may occur in the future. 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 and business continuity arrangements, our production environment and all of our customers’ data are currently replicated in near real-time in a separate facility located elsewhere. 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, as well as local administrative actions, changes to legal or permitting requirements and litigation to stop, limit or delay operation. 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 and business continuity arrangements, our services could be interrupted.

When we add data centers and add capacity, 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.

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 laws and 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 new and 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. For example, in October 2015, the European Court of Justice invalidated the U.S.-EU Safe Harbor framework that had been in place since 2000, which allowed companies to meet certain European legal requirements for the transfer of personal data from the European Economic Area to the United States. While other adequate legal mechanisms to lawfully transfer such data remain, the invalidation of the U.S.-EU Safe Harbor framework may result in different European data protection regulators applying

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differing standards for the transfer of personal data, which could result in increased regulation, cost of compliance and limitations on data transfer for Salesforce and its customers. The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our services, reduce overall demand for our services, lead to significant fines, penalties or liabilities for noncompliance, or slow the pace at which we close sales transactions, any of which could harm our business.

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.

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

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.

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 generalized platforms and vendors of packaged business software, as well as companies offering enterprise apps, including CRM, collaboration and business intelligence software. We also compete with internally developed apps and face competition from enterprise software vendors and online service providers who may develop toolsets and products that allow

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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;

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

• IoT platforms from large companies that have existing relationships with hardware and software companies.

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 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.

We are subject to risks associated with our strategic investments. Other-than-temporary impairments in the value of our investments could negatively impact our financial results.

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 strategic 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, acquisition or other favorable market event 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 value, we may be required to record an other than temporary impairment, which could be material. We have in the past written off the full value of specific investments. Similar situations could occur in the future and negatively impact our financial results. All of our investments are subject to a risk of a partial or total loss of investment capital.

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;

• 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;

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• 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.

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 is 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;

• evolving regulations of cloud computing and cross-border data transfer restrictions and similar regulations;

• 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;

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• 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, which could be material in a particular quarter;

• 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;

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

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

• the impact of new accounting pronouncements, for example, the adoption of ASU 2016-09 and the volatility of the effective tax rate;

• 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.

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.

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, Communities and IoT Clouds remain relatively new and it is uncertain whether our efforts will ever result in significant revenue for us. Further, the introduction of significant platform changes and upgrades, including our conversion to our new Lightning platform, and 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.

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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.

Additionally, if we fail to anticipate or identify significant Internet-related and other technology trends and developments early enough, or if we do not devote appropriate resources to adapting to such trends and developments, our business could be harmed.

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 transfer, storage and protection, and industry-specific laws and regulations, including rules related to compliance by our third-party resellers;

• 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

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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 increases or 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.

We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows from changes in the value of the U.S. Dollar versus local currencies.

We conduct our business in the following locations: United States, Europe, Canada, Asia Pacific and Japan. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, additional headcount in foreign locations, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar and Japanese Yen against the U.S. Dollar. These exposures may change over time as business practices evolve and economic conditions change. The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and expenses for any given fiscal period. Such volatility, even when it increases our revenues or decreases our expenses, impacts our ability to accurately predict our future results and earnings.

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. 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.

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.

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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. If we fail to successfully scale our operations and increase productivity, we will be unable to execute our business plan.

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, including governmental entities, 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 and governmental entities 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.

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, commercial, corporate and securities, labor and employment, class actions, 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.

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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.

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. In addition, positions the Company takes on social issues may be unpopular with some customers or potential customers, which may impact our ability to attract or retain such customers. 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.

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In addition, we believe in the importance of our corporate culture, or Aloha spirit, which fosters dialogue, collaboration, recognition and a sense of family. As our organization grows, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our future success.

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 financial 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 of stock-based compensation, 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 accounting principles, changes in U.S federal and state or international tax laws applicable to corporate multinationals such as the legislation recently enacted in the United Kingdom and Australia, other fundamental law changes currently being considered by many countries and changes in taxing jurisdictions' administrative interpretations, decisions, policies and positions. Additionally, in October 2015, the Organisation for Economic Co-Operation and Development released final guidance covering various topics, including transfer pricing, country-by-country reporting and definitional changes to permanent establishment which could ultimately impact our tax liabilities.

We may also 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 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 the 0.25% convertible senior notes we issued in March 2013 (the “0.25% Senior Notes”) due April 1, 2018, the loan we assumed when we purchased 50 Fremont, and capital lease arrangements. Additionally, we have significant contractual commitments in operating lease arrangements, which are not reflected on our consolidated balance sheets. In addition, we have a financing obligation for a leased facility of which we are deemed the owner for accounting purposes. Finally, we have a revolving credit facility under which we can draw down up to $650.0 million. We currently have no outstanding borrowings under this credit facility. Our maintenance of this indebtedness and any additional issuance of 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

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• 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 or contractual obligations resulting from our leases. 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.

The new lease accounting guidance places operating lease activity on our consolidated balance sheet in fiscal 2020, which results in an increase in both our assets and financing obligations. The implementation of this guidance may impact our ability to obtain the necessary financing from financial institutions at commercially viable rates or at all as this new guidance will result in a higher financing obligation on our consolidated balance sheet.

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.

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, year-over-year growth rates for individual core service offerings and other financial metrics and non-financial metrics, and how those results compare to analyst expectations;

• variations in, and limitations of, the various financial and other metrics and modeling used by analysts in their research and reports about our business;

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

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• 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.

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.

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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;

• provide that directors may only be removed 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.

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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.

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

In connection with acquisitions made during the three months ended April 30, 2016, the Company issued 4,812,325 shares of Company common stock on February 1, 2016; 38,010 shares of Company common stock on February 8, 2016; and 100,579 shares of Company common stock on February 29, 2016. In addition, in connection with another acquisition, on April 1, 2016, the Company agreed to issue 139,332 shares of Company common stock in the future subject to time-based contingencies. All of these issuances were made in reliance on one or more of the following exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”): Section 4(a)(2) of the Securities Act, Regulation D promulgated under the Securities Act, and Regulation S promulgated under the Securities Act.    

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The documents listed in the Index to Exhibits of this quarterly report on Form 10-Q are incorporated by reference or are filed with this quarterly report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

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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 20, 2016
	salesforce.com, inc.
	By:	/S/    MARK J. HAWKINS
		Mark J. Hawkins
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: May 20, 2016
	salesforce.com, inc.
	By:	/S/    JOE ALLANSON
		Joe Allanson
		Executive Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

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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	03/21/2016
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 Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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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 20, 2016	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark J. 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 20, 2016	/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, 2016 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 20, 2016	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

Based on my knowledge, I, Mark J. 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, 2016 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 20, 2016	/s/ MARK J HAWKINS
	Mark J. Hawkins
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information shares in Millions	3 Months Ended
	Apr. 30, 2016 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2016
Document Fiscal Year Focus	2017
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	677.5

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Current assets:
Cash and cash equivalents	$ 1,799,083	$ 1,158,363
Short-term marketable securities	232,109	183,018
Accounts receivable, net	1,192,965	2,496,165
Deferred commissions	243,890	259,187
Prepaid expenses and other current assets	306,625	250,594
Total current assets	3,774,672	4,347,327
Marketable securities, noncurrent	1,684,260	1,383,996
Property and equipment, net	1,711,472	1,715,828
Deferred commissions, noncurrent	180,245	189,943
Capitalized software, net	407,030	384,258
Goodwill	4,129,656	3,849,937
Strategic investments	520,750	520,721
Other assets, net	409,185	370,910
Total assets	12,817,270	12,762,920
Current liabilities:
Accounts payable, accrued expenses and other liabilities	1,093,197	1,349,338
Deferred revenue	3,991,906	4,267,667
Total current liabilities	5,085,103	5,617,005
Convertible 0.25% senior notes, net	1,095,104	1,088,097
Loan assumed on 50 Fremont	198,066	197,998
Deferred revenue, noncurrent	15,008	23,886
Other noncurrent liabilities	839,725	833,065
Total liabilities	7,233,006	7,760,051
Stockholders’ equity:
Common stock	678	671
Additional paid-in capital	6,217,946	5,705,386
Accumulated other comprehensive loss	(28,577)	(49,917)
Accumulated deficit	(605,783)	(653,271)
Total stockholders’ equity	5,584,264	5,002,869
Total liabilities and stockholders’ equity	$ 12,817,270	$ 12,762,920

XML

Consolidated Balance Sheets (Parenthetical)	Apr. 30, 2016	Jan. 31, 2016
Notes Payable to Banks | 0.25% Convertible Senior Notes due April 1, 2018
Contractual interest rate	0.25%	0.25%

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Apr. 30, 2016	Apr. 30, 2015
Revenues:
Subscription and support		$ 1,775,493	$ 1,405,287
Professional services and other		141,110	105,880
Total revenues		1,916,603	1,511,167
Cost of revenues:
Subscription and support	[1],[2]	335,828	274,241
Professional services and other	[1],[2]	161,153	107,561
Total cost of revenues	[1],[2]	496,981	381,802
Gross profit	[1],[2]	1,419,622	1,129,365
Operating expenses:
Research and development	[1],[2]	260,970	222,128
Marketing and sales	[1],[2]	895,860	736,938
General and administrative	[1],[2]	210,806	175,811
Operating lease termination resulting from purchase of 50 Fremont	[1],[2]	0	(36,617)
Total operating expenses	[1],[2]	1,367,636	1,098,260
Income from operations		51,986	31,105
Investment income		8,122	4,561
Interest expense		(22,011)	(16,675)
Gains on sales of strategic investments		12,864	0
Other expense	[1]	(13,806)	(918)
Income before benefit from (provision for) income taxes		37,155	18,073
Benefit from (provision for) income taxes		1,604	(13,981)
Net income		$ 38,759	$ 4,092
Basic net income per share (in dollars per share)		$ 0.06	$ 0.01
Diluted net income per share (in dollars per share)		$ 0.06	$ 0.01
Shares used in computing basic net income per share (in shares)		677,514	653,809
Shares used in computing diluted net income per share (in shares)		686,799	664,310

[1] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended April 30, 2016 2015Cost of revenues $22,215 $19,690Marketing and sales 15,386 20,027Other non-operating expense 706 815

[2] Amounts include stock-based expense, as follows: Three Months Ended April 30, 2016 2015Cost of revenues $26,634 $15,381Research and development 35,168 31,242Marketing and sales 95,474 70,534General and administrative 31,643 25,403

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Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Stock-based expenses	$ 188,919	$ 142,560
Cost of revenues
Amortization of purchased intangibles from business combinations	22,215	19,690
Stock-based expenses	26,634	15,381
Marketing and sales
Amortization of purchased intangibles from business combinations	15,386	20,027
Stock-based expenses	95,474	70,534
Research and development
Stock-based expenses	35,168	31,242
Other non-operating expense
Amortization of purchased intangibles from business combinations	706	815
General and administrative
Stock-based expenses	$ 31,643	$ 25,403

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 38,759	$ 4,092
Other comprehensive income (loss), before tax and net of reclassification adjustments:
Foreign currency translation and other gains (losses)	10,256	(1,855)
Unrealized gains (losses) on investments	11,084	(2,389)
Other comprehensive income (loss), before tax	21,340	(4,244)
Tax effect	0	0
Other comprehensive income (loss), net of tax	21,340	(4,244)
Comprehensive income (loss)	$ 60,099	$ (152)

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Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Apr. 30, 2016	Apr. 30, 2015
Operating activities:
Net income		$ 38,759	$ 4,092
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		132,772	127,927
Amortization of debt discount and transaction costs		7,185	5,861
Gains on sales of strategic investments		(12,864)	0
50 Fremont lease termination	[1],[2]	0	(36,617)
Amortization of deferred commissions		88,514	77,155
Expenses related to employee stock plans		188,919	142,560
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net		1,307,312	979,170
Deferred commissions		(63,519)	(50,092)
Prepaid expenses and other current assets and other assets		(56,671)	(11,274)
Accounts payable, accrued expenses and other liabilities		(286,228)	(239,072)
Deferred revenue		(293,117)	(264,629)
Net cash provided by operating activities		1,051,062	735,081	[3]
Investing activities:
Business combinations, net of cash acquired		(1,799)	(12,470)
Purchase of 50 Fremont land and building		0	(425,376)
Deposit for purchase of 50 Fremont land and building		0	115,015
Non-refundable amounts received for sale of land available for sale		0	2,852
Strategic investments		(22,061)	(144,462)
Purchases of marketable securities		(589,336)	(207,225)
Sales of marketable securities		222,934	192,184
Maturities of marketable securities		23,285	14,446
Capital expenditures		(83,301)	(71,087)
Net cash used in investing activities		(450,278)	(536,123)
Financing activities:
Proceeds from employee stock plans		89,141	155,015
Principal payments on capital lease obligations		(49,968)	(16,825)
Payments on revolving credit facility and term loan		0	(300,000)
Net cash provided by (used in) financing activities		39,173	(161,810)	[3]
Effect of exchange rate changes		763	(3,309)
Net increase in cash and cash equivalents		640,720	33,839
Cash and cash equivalents, beginning of period		1,158,363	908,117
Cash and cash equivalents, end of period		1,799,083	941,956
Cash paid during the period for:
Interest		23,750	4,252
Income taxes, net of tax refunds		7,909	10,581
Non-cash financing and investing activities:
Fixed assets acquired under capital leases		585	2,960
Building - leased facility acquired under financing obligation		1,676	19,966
Fair value of loan assumed on 50 Fremont		0	198,751
Fair value of equity awards assumed		$ 11,449	$ 0
Fair value of common stock issued as consideration for business combination		278,372	0

[1] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended April 30, 2016 2015Cost of revenues $22,215 $19,690Marketing and sales 15,386 20,027Other non-operating expense 706 815

[2] Amounts include stock-based expense, as follows: Three Months Ended April 30, 2016 2015Cost of revenues $26,634 $15,381Research and development 35,168 31,242Marketing and sales 95,474 70,534General and administrative 31,643 25,403

[3] During the three months ended April 30, 2016, the Company early adopted Accounting Standards Update No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation. The Company has adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact for the three months ended April 30, 2015 to net cash provided by operating activities and net cash used in financing activities was $4,224.

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Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	3 Months Ended
	Apr. 30, 2015 USD ($)
Impact of net cash provided by operating activities	$ 735,081	[1]
Impact of net cash provided by financing activities	(161,810)	[1]
New Accounting Pronouncement, Early Adoption, Effect [Member] | Accounting Standards Update 2016-09 [Member]
Impact of net cash provided by operating activities	4,224
Impact of net cash provided by financing activities	$ 4,224

[1] During the three months ended April 30, 2016, the Company early adopted Accounting Standards Update No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation. The Company has adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact for the three months ended April 30, 2015 to net cash provided by operating activities and net cash used in financing activities was $4,224.

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Summary of Business and Significant Accounting Policies

3 Months Ended

Apr. 30, 2016

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 solutions, with a focus on customer relationship management, or CRM. The Company introduced its first CRM solution in February 2000, and has since expanded its service offerings with new editions, solutions, features and platform capabilities.

The Company's mission is to help its customers transform themselves into customer-centric companies by empowering them to connect with their customers in entirely new ways. The Company's Customer Success Platform, including sales force automation, customer service and support, marketing automation, community management, analytics, application development, Internet of Things integration and the Company's professional cloud services, provide the next-generation platform of enterprise applications and services to enable customer success.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ending January 31, 2017.

Basis of Presentation

The accompanying consolidated balance sheet as of April 30, 2016 and the consolidated statements of operations, the consolidated statements of comprehensive income (loss) and the consolidated statements of cash flows for the three months ended April 30, 2016 and 2015, respectively, are unaudited. The consolidated balance sheet data as of January 31, 2016 was derived from the audited consolidated financial statements that are included in the Company’s fiscal 2016 Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2016. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2016 Form 10-K.

The accompanying 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 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, 2016, and its results of operations, including its comprehensive income (loss), and its cash flows for the three months ended April 30, 2016 and 2015. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2016 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2017.

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 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 useful lives of intangible assets, property and equipment and building and structural components, and

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

Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities.

Principles of Consolidation

The 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 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. 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, 2016 and January 31, 2016. No single customer accounted for five percent or more of total revenue during the three months ended April 30, 2016 and 2015.

Geographic Locations

As of April 30, 2016 and January 31, 2016, assets located outside the Americas were 11 percent of total assets.

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

	Three Months Ended April 30,
	2016		2015
Americas	$	1,413,229	$	1,115,120
Europe	327,854		258,805
Asia Pacific	175,520		137,242
	$	1,916,603	$	1,511,167

Americas revenue attributed to the United States was approximately 97 percent and 95 percent during the three months ended April 30, 2016 and 2015, respectively. No other country represented more than ten percent of total revenue during the three months ended April 30, 2016 and 2015.

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 Company’s professional services contracts are either on a time and material or fixed fee 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 and 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. 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 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 consolidated statements of comprehensive income (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:

Computers, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years
Building and structural components	Average weighted useful life of 32 years
Building- leased facility	27 years
Building improvements	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 and Intangible Assets 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.

Long-Lived Assets and Impairment Assessment

The Company evaluates long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset's carrying amount 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. There was no impairment of long-lived assets during the three months ended April 30, 2016 and 2015, respectively.

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 consolidated statements of operations.

In the event that the Company enters into a business combination with an entity in which the Company previously held a strategic investment, significant gains or losses will be disclosed separately within the 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 to operating expense.

In the event the Company is the deemed owner for accounting purposes during construction, 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 aggregate stock compensation remaining to be amortized to costs and expenses will be recognized over a weighted average period of 2.2 years.The Company recognizes stock-based expenses related to shares issued pursuant to its Amended and Restated 2004 Employee Stock Purchase Plan (“ESPP” or “2004 Employee Stock Purchase Plan”) 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	2016			2015
Volatility	32.1		%	37.4		%
Estimated life	3.5 years			3.6 years
Risk-free interest rate	0.9-1.0		%	1.13-1.36		%
Weighted-average fair value per share of grants	$	17.35		$	19.52

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. The estimated life for the stock options was based on an analysis of historical exercise activity.

ESPP assumptions and the related fair value per share table will only be disclosed in the three month period in which there is ESPP activity, such as an ESPP purchase. The Company's ESPP Plan allows for two purchases during the year. The estimated life of the ESPP will be based on the two purchase periods within each offering period.

The risk-free interest rate 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.

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 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 consolidated statements of comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (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 material liabilities related to such obligations in the accompanying 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 Pronouncements Adopted

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. However, ASU 2015-03 does not address deferred issuance costs for line-of-credit arrangements; therefore, in August 2015, the FASB issued Accounting Standards Update No. 2015-15, “Interest-Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 allows an entity to defer debt issuance costs associated with line-of-credit arrangements, including arrangements with no outstanding borrowings, and classify them as an asset, and amortize them over the term of the arrangements. The recognition and measurement guidance for debt issuance costs is not affected by the standards. The Company adopted the standards in the three months ended April 30, 2016. Upon adoption, the unamortized debt issuance costs previously reported in Other assets, net, with a carrying amount of approximately $7.9 million at January 31, 2016, were reclassified and presented as a deduction of the corresponding liabilities, Convertible 0.25% senior notes, net and Loan assumed on 50 Fremont.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments in business combinations. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The Company adopted this standard during the three months ending April 30, 2016 and there was no material impact of this on the Company's financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting” (“ASU 2016-09”) which simplifies and improves several aspects of the accounting for employee share-based payment transactions for public entities. The new guidance requires companies to record excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations when the awards vest or are settled, and eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the statement of cash flows. The Company early adopted the standard in the three months ended April 30, 2016.  Upon adoption, the Company recognized the previously unrecognized excess tax benefits using the modified retrospective transition method, which resulted in a cumulative-effect adjustment of $8.7 million to accumulated deficit. This adjustment reduced the April 30, 2016 accumulated deficit balance. The previously unrecognized excess tax effects were recorded as a deferred tax asset, which was fully offset by a valuation allowance. Without the valuation allowance, the Company’s deferred tax asset would have increased by $614.5 million. The Company also elected to apply the change in presentation to the statements of cash flows retrospectively and no longer classified the excess tax benefits from employee stock plans as a reduction from operating cash flows for all periods presented.   

Pending Accounting Pronouncements

In May 2014, the 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. The FASB deferred the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP for one year. 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 consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact to its consolidated financial statements.

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Investments

3 Months Ended

Apr. 30, 2016

Investments Schedule [Abstract]

Investments

Investments

Marketable Securities

At April 30, 2016, 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	$	1,089,511	$	5,661	$	(1,277	)	$	1,093,895
U.S. treasury securities	221,467		783		(39		)	222,211
Mortgage backed obligations	125,778		213		(174		)	125,817
Asset backed securities	334,894		481		(190		)	335,185
Municipal securities	74,987		319		(86		)	75,220
Foreign government obligations	31,898		79		(3		)	31,974
U.S. agency obligations	32,058		20		(11		)	32,067
Total marketable securities	$	1,910,593	$	7,556	$	(1,780	)	$	1,916,369

At January 31, 2016, 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	$	949,266	$	1,398	$	(2,983	)	$	947,681
U.S. treasury securities	157,625		375		(56		)	157,944
Mortgage backed obligations	104,242		106		(323		)	104,025
Asset backed securities	271,292		186		(226		)	271,252
Municipal securities	44,934		209		(6		)	45,137
Foreign government obligations	18,014		42		(5		)	18,051
U.S. agency obligations	16,076		16		(6		)	16,086
Covered bonds	6,690		148		0			6,838
Total marketable securities	$	1,568,139	$	2,480	$	(3,605	)	$	1,567,014

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

	As of
	April 30, 2016		January 31, 2016
Recorded as follows:
Short-term (due in one year or less)	$	232,109	$	183,018
Long-term (due after one year)	1,684,260		1,383,996
	$	1,916,369	$	1,567,014

As of April 30, 2016, 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	$	272,239	$	(813	)	$	61,847	$	(464	)	$	334,086	$	(1,277	)
U.S. treasury securities	47,552		(39		)	0		0			47,552		(39		)
Mortgage backed obligations	52,427		(126		)	8,986		(48		)	61,413		(174		)
Asset backed securities	106,226		(148		)	12,371		(42		)	118,597		(190		)
Municipal securities	18,065		(86		)	0		0			18,065		(86		)
Foreign government obligations	7,650		(3		)	0		0			7,650		(3		)
U.S. agency obligations	13,481		(11		)	0		0			13,481		(11		)
	$	517,640	$	(1,226	)	$	83,204	$	(554	)	$	600,844	$	(1,780	)

The unrealized losses for each of the fixed rate marketable securities were less than $98,000. 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, 2016. 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, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	347,815	$	0	$	347,815
Money market mutual funds	868,519		0		0		868,519
Agency and sovereign paper	0		2,904		0		2,904
Marketable securities:
Corporate notes and obligations	0		1,093,895		0		1,093,895
U.S. treasury securities	0		222,211		0		222,211
Mortgage backed obligations	0		125,817		0		125,817
Asset backed securities	0		335,185		0		335,185
Municipal securities	0		75,220		0		75,220
Foreign government obligations	0		31,974		0		31,974
U.S. agency obligations	0		32,067		0		32,067
Foreign currency derivative contracts (2)	0		19,871		0		19,871
Total Assets	$	868,519	$	2,286,959	$	0	$	3,155,478
Liabilities
Foreign currency derivative contracts (3)	$	0	$	7,973	$	0	$	7,973
Total Liabilities	$	0	$	7,973	$	0	$	7,973

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of April 30, 2016, in addition to $579.8 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of April 30, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the consolidated balance sheet as of April 30, 2016.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of January 31, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	236,798	$	0	$	236,798
Money market mutual funds	216,107		0		0		216,107
Commercial paper	0		159,230		0		159,230
Agency and sovereign paper	0		13,599		0		13,599
Marketable securities:
Corporate notes and obligations	0		947,681		0		947,681
U.S. treasury securities	0		157,944		0		157,944
Mortgage backed obligations	0		104,025		0		104,025
Asset backed securities	0		271,252		0		271,252
Municipal securities	0		45,137		0		45,137
Foreign government obligations	0		18,051		0		18,051
U.S. agency obligations	0		16,086		0		16,086
Covered bonds	0		6,838		0		6,838
Foreign currency derivative contracts (2)	0		4,731		0		4,731
Total Assets	$	216,107	$	1,981,372	$	0	$	2,197,479
Liabilities
Foreign currency derivative contracts (3)	$	0	$	14,025	$	0	$	14,025
Total Liabilities	$	0	$	14,025	$	0	$	14,025

______________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31, 2016, in addition to $532.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of January 31, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying consolidated balance sheet as of January 31, 2016.

Derivative Financial Instruments

The Company enters into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk. 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, 2016 and January 31, 2016, the foreign currency derivative contracts that were not settled were recorded at fair value on the 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, 2016		January 31, 2016
Notional amount of foreign currency derivative contracts	$	1,513,108	$	1,274,515
Fair value of foreign currency derivative contracts	$	11,898	$	(9,294	)

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, 2016		January 31, 2016
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	19,871	$	4,731
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	7,973	$	14,025

The effect of the derivative instruments not designated as hedging instruments on the consolidated statements of operations during the three months ended April 30, 2016 and 2015, 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	2016			2015
Foreign currency derivative contracts	Other expense	$	(1,442	)	$	11,459

Strategic Investments

The Company's strategic investments are comprised of marketable equity securities and non-marketable debt and equity securities. Marketable equity securities are measured using quoted prices in their respective active markets and the non-marketable equity and debt securities are recorded at cost. These investments are presented on the consolidated balance sheets within strategic investments.

As of April 30, 2016, the Company had six investments in marketable equity securities with a fair value of $20.4 million, which includes an unrealized gain of $13.1 million. As of January 31, 2016, the Company had six investments in marketable equity securities with a fair value of $16.2 million, which included an unrealized gain of $8.5 million. The change in the fair value of the investments in publicly held companies is recorded in the consolidated balance sheets within strategic investments and accumulated other comprehensive loss.

The Company’s interest in non-marketable debt and equity securities consists of noncontrolling debt and equity 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, 2016 and January 31, 2016, the carrying value of the Company’s non-marketable debt and equity securities was $500.3 million and $504.5 million, respectively. The estimated fair value of the non-marketable debt and equity securities was approximately $706.9 million and $714.1 million as of April 30, 2016 and January 31, 2016, respectively. These investments are measured using the cost method of accounting, therefore the unrealized gains of $206.6 million and $209.6 million as of April 30, 2016 and January 31, 2016, respectively, are not recorded in the consolidated financial statements.

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,
	2016			2015
Interest income	$	7,773		$	3,049
Realized gains	1,054			2,128
Realized losses	(705		)	(616		)
Total investment income	$	8,122		$	4,561

Reclassification adjustments out of accumulated other comprehensive income (loss) into net income were immaterial for the three months ended April 30, 2016 and 2015, respectively.

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Property and Equipment

3 Months Ended

Apr. 30, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and Equipment

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

	As of
	April 30, 2016			January 31, 2016
Land	$	183,888		$	183,888
Buildings and building improvements	618,510			614,081
Computers, equipment and software	1,321,660			1,281,766
Furniture and fixtures	85,327			82,242
Leasehold improvements	499,108			473,688
	$	2,708,493		$	2,635,665
Less accumulated depreciation and amortization	(997,021		)	(919,837		)
	$	1,711,472		$	1,715,828

Depreciation and amortization expense totaled $75.6 million and $72.5 million during the three months ended April 30, 2016 and 2015, respectively.

Computers, equipment and software at April 30, 2016 and January 31, 2016 included a total of $748.4 million and $747.1 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $335.5 million and $310.3 million, respectively, at April 30, 2016 and January 31, 2016. Amortization of assets under capital leases is included in depreciation and amortization expense.

Building - 350 Mission

In December 2013, 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, which is the total office space available in the building. 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 a result, the Company has capitalized the construction costs as Building with a corresponding current and noncurrent financing obligation liability and has accounted for the underlying land implicitly as an operating lease. As of April 30, 2016, the Company had capitalized $178.8 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $18.1 million and $202.2 million, respectively. As of January 31, 2016, the Company had capitalized $174.6 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $15.4 million and $196.7 million, respectively. The total expected financing obligation in the form of minimum lease payments inclusive of the amounts currently recorded, is $336.9 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord which commenced on October 2015. To the extent that operating expenses for 350 Mission are material, the Company, as the deemed accounting owner, will record the operating expenses.

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Business Combinations

3 Months Ended

Apr. 30, 2016

Business Combinations [Abstract]

Business Combinations

Business Combinations

Steelbrick

In February 2016, the Company acquired the outstanding stock of SteelBrick, Inc. (“SteelBrick”), a next generation quote-to-cash platform, delivered 100 percent natively on the Salesforce platform, which offers applications, or apps, for automating the entire deal close process - from generating quotes and configuring orders to collecting cash. The Company has included the financial results of SteelBrick in the consolidated financial statements from the date of acquisition, which have not been material to date. The costs associated with the acquisition were not material.

The preliminary acquisition date fair value consideration transferred for SteelBrick was approximately $314.8 million, which consisted of the following (in thousands, except for share data):

	Fair Value
Cash	$	1,698
Common stock (4,288,447 shares)	278,372
Fair value of stock options and restricted stock awards assumed	10,989
Fair value of pre-existing relationship	23,726
Total	$	314,785

The fair value of stock options assumed by the Company was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.08 was applied to convert SteelBrick's outstanding equity awards for SteelBrick's common stock into equity awards for shares of the Company's common stock.

The Company had a $13.9 million, or approximately six percent, noncontrolling equity investment in SteelBrick prior to the acquisition. The acquisition date fair value of the Company's previously held equity interest was approximately $23.7 million and is included in the measurement of the consideration transferred. The Company recognized a gain of approximately $9.8 million as a result of remeasuring its prior equity interest in SteelBrick held before the business combination. The gain is included in gains on sales of strategic investments on the consolidated statement of operations.

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Fair Value
Cash and cash equivalents	$	59,296
Other current and noncurrent tangible assets	3,012
Customer contract asset, current and noncurrent	16,903
Intangible assets	49,160
Goodwill	217,986
Deferred revenue, current and noncurrent	(8,479		)
Customer liability, current and noncurrent	(9,949		)
Other liabilities, current and noncurrent	(2,665		)
Deferred tax liability	(10,479		)
Net assets acquired	$	314,785

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair values assigned to tangible assets acquired, liabilities assumed and identifiable intangible assets are based on management's estimates and assumptions. The deferred tax liability established was primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. The estimated fair values of assets acquired and liabilities assumed, specifically current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Thus, the provisional measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition.

	Fair Value		Useful Life
Developed technology	$	30,700	4 years
Customer relationships	17,110		7 years
Other purchased intangible assets	1,350		1 year
Total intangible assets subject to amortization	$	49,160

The amount recorded for developed technology represents the estimated fair value of SteelBrick's quote-to-cash and billing technology. The amount recorded for customer relationships represents the fair values of the underlying relationship with SteelBrick customers. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities when integrating SteelBrick's quote-to-cash technology with the Company's other offerings. The majority of the goodwill balance is not deductible for U.S. income tax purposes.

The Company assumed unvested equity awards for shares of SteelBrick's common stock with a fair value of $39.6 million. Of the total consideration, $11.0 million was allocated to the consideration transferred and $28.6 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

MetaMind

In April 2016, the Company acquired MetaMind, Inc. (“MetaMind”) for approximately $32.8 million in cash, net of cash acquired. This amount includes amounts to be paid after an initial holdback period, and assumed equity awards. The primary reason for the acquisition was to extend the Company's intelligence in natural language processing and image recognition across all clouds. The Company has included the financial results of MetaMind in its consolidated financial statements from the date of acquisition, which have not been material to date. The costs associated with the acquisition were not material. In allocating the purchase consideration for MetaMind based on estimated fair values, the Company recorded $31.2 million of goodwill. The goodwill balance is not deductible for U.S. income tax purposes. The estimated fair values of assets acquired and liabilities assumed, specifically current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Thus, the provisional measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The Company assumed unvested equity awards for shares of MetaMind's common stock with a fair value of $5.5 million. Of the total consideration, $0.5 million was allocated to the purchase consideration and $5.0 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

The Company's chairman, who held a greater than ten percent ownership interest in MetaMind, received approximately $6.0 million in total proceeds, subject to customary escrow amounts, in connection with this acquisition.

Other Business Combinations

During the three months ended April 30, 2016, the Company acquired two other companies for an aggregate of $41.6 million in cash, net of cash acquired, and has included the financial results of these companies in its consolidated financial statements from the respective dates of acquisition. These transactions, individually and in the aggregate, are not material to the Company. The costs associated with these acquisitions were not material. The Company accounted for these transactions as business combinations. In allocating the purchase consideration for each company based on estimated fair values, the Company recorded $30.6 million of goodwill. The goodwill balance associated with these transactions is not deductible for U.S. income tax purposes. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

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Debt

3 Months Ended

Apr. 30, 2016

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, 2016			January 31, 2016
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,095,104	(2)	$	1,088,097	(2)

___________ 

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

(2)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

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, 2016			January 31, 2016
Liability component :
Principal (1)	$	1,150,000		$	1,150,000
Less: debt discount, net (2)	(48,753		)	(54,941		)
Less: debt issuance cost (3)	(6,143		)	(6,962		)
Net carrying amount	$	1,095,104		$	1,088,097

(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 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.

(3)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

The total estimated fair value of the Company’s 0.25% Senior Notes at April 30, 2016 was $1.5 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 2017.

Based on the closing price of the Company’s common stock of $75.80 on April 29, 2016, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $162.0 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended April 30, 2016.

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% Senior 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% Senior Notes. The 0.25% Note Hedges are intended to reduce the potential economic dilution upon conversion of the 0.25% Senior Notes in the event that the market value per share of the Company’s common stock, as measured under the 0.25% Senior Notes, at the time of exercise is greater than the conversion price of the 0.25% Senior Notes. The 0.25% Note Hedges are separate transactions and are not part of the terms of the 0.25% Senior Notes. Holders of the 0.25% Senior 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% Senior Notes or the 0.25% Note Hedges. Holders of the 0.25% Senior Notes and 0.25% Note Hedges will not have any rights with respect to the 0.25% Warrants.

Revolving Credit Facility

Since October 2014, the Company maintains a 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”). 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, 2016.

There are currently no outstanding borrowings held under the Credit Facility as of April 30, 2016. The Company continues to pay a fee of 0.15% on the undrawn amount of the Credit Facility.

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 initially requires interest only payments. Beginning in fiscal year 2019, principal and interest payments are required, with the remaining principal due at maturity. For the three months ended April 30, 2016, total interest expense recognized was $1.9 million. 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, 2016.

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 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2016		2015
Contractual interest expense	$	2,814	$	3,350
Amortization of debt issuance costs	1,028		1,018
Amortization of debt discount	6,226		6,059
	$	10,068	$	10,427

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Other Balance Sheet Accounts

3 Months Ended

Apr. 30, 2016

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, 2016		January 31, 2016
Prepaid income taxes	24,329		22,044
Other taxes receivable	28,117		27,341
Prepaid expenses and other current assets	254,179		201,209
	$	306,625	$	250,594

Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Capitalized internal-use software development costs, net of accumulated amortization of $201,292 and $186,251, respectively	$	131,376	$	123,065
Acquired developed technology, net of accumulated amortization of $505,147 and $481,118, respectively	275,654		261,193
	$	407,030	$	384,258

Capitalized internal-use software amortization expense totaled $15.0 million and $11.3 million for the three months ended April 30, 2016 and 2015, respectively. Acquired developed technology amortization expense totaled $24.0 million and $21.9 million for the three months ended April 30, 2016 and 2015, respectively.

The Company capitalized $1.8 million and $1.6 million of stock-based expenses related to capitalized internal-use software development for the three months ended April 30, 2016 and 2015, respectively.

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, 2016	$	3,849,937
Steelbrick	217,986
MetaMind	31,242
Other business combinations	30,554
Finalization of acquisition date fair values	(63		)
Balance as of April 30, 2016	$	4,129,656

Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes, noncurrent, net	$	17,597	$	15,986
Long-term deposits	23,650		19,469
Purchased intangible assets, net of accumulated amortization of $228,704 and $212,248, respectively	267,722		258,580
Acquired intellectual property, net of accumulated amortization of $24,186 and $22,439, respectively	10,564		10,565
Other (1)	89,652		66,310
	$	409,185	$	370,910

(1) In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented, which resulted in an adjustment of $7.9 million to Other.

Purchased intangible assets amortization expense for the three months ended April 30, 2016 and 2015 was $16.5 million and $20.0 million, respectively. Acquired intellectual property amortization expense at both three months ended April 30, 2016 and 2015 was $1.7 million.

Accounts Payable, Accrued Expenses and Other Liabilities

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

	As of
	April 30, 2016		January 31, 2016
Accounts payable	$	54,583	$	71,481
Accrued compensation	386,410		554,502
Accrued other liabilities	433,631		454,287
Accrued income and other taxes payable	154,550		205,781
Accrued professional costs	30,095		33,814
Accrued rent	15,789		14,071
Financing obligation - leased facility, current (2)	18,139		15,402
	$	1,093,197	$	1,349,338

Other Noncurrent Liabilities

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

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes and income taxes payable	$	85,579	$	85,996
Financing obligation - leased facility (2)	202,246		196,711
Long-term lease liabilities and other	551,900		550,358
	$	839,725	$	833,065

(2) As of January 31, 2016, 350 Mission was in construction. In March 2016, construction was completed on the building.

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Stockholders' Equity

3 Months Ended

Apr. 30, 2016

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.

As of April 30, 2016, $93.9 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.

During fiscal 2016, the Company granted a performance-based restricted stock unit award to the Chairman of the Board and Chief Executive Officer subject to vesting based on a performance-based condition and a service-based condition. At the end of the three year service period based on the Company's share price performance, as it relates to the performance condition, these performance-based restricted stock units will vest simultaneously.

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, 2016	46,879,908		26,258,798		$	56.26
Increase in shares authorized:
2013 Equity Incentive Plan	80,332
2014 Inducement Equity Incentive Plan	11,049
Assumed equity plans	584,392
Options granted under all plans	(867,292	)	867,292		40.58
Restricted stock activity	(1,821,324	)
Performance restricted stock units	0
Stock grants to board and advisory board members	(44,026	)
Exercised	0		(854,362	)	38.23
Plan shares expired	(28,916	)
Canceled	250,573		(250,573	)	67.73
Balance as of April 30, 2016	45,044,696		26,021,155		$	56.22	$	538,367,465
Vested or expected to vest			23,947,836		$	55.11	$	519,312,755
Exercisable as of April 30, 2016			10,372,672		$	43.12	$	338,995,305

The total intrinsic value of the options exercised during the three months ended April 30, 2016 and 2015 was $28.6 million and $113.3 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 4.7 years.

As of April 30, 2016, options to purchase 10,372,672 shares were vested at a weighted average exercise price of $43.12 per share and had a remaining weighted-average contractual life of approximately 3.3 years. The total intrinsic value of these vested options as of April 30, 2016 was $339.0 million.

The following table summarizes information about stock options outstanding as of April 30, 2016:

	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 $37.95	4,461,075	2.3	$	27.45	3,691,607	$	28.16
$38.03 to $52.14	2,480,093	2.0	39.87		1,934,518	39.57
$52.30	3,684,201	4.6	52.30		2,012,682	52.30
$53.60 to $57.79	1,414,340	5.1	55.31		514,062	55.35
$59.34	6,138,145	5.6	59.34		2,015,280	59.34
$59.37 to $77.86	2,326,108	6.2	68.62		204,523	65.72
$80.99	5,517,193	6.6	80.99		0	0.00
	26,021,155	4.8	$	56.22	10,372,672	$	43.12

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2016	21,294,585		$	0.001
Granted- restricted stock units and awards	1,468,220		0.001
Canceled	(512,280	)	0.001
Vested and converted to shares	(1,840,948	)	0.001
Balance as of April 30, 2016	20,409,577		$	0.001	$	1,547,045,937
Expected to vest	17,223,868				$	1,305,569,194

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, 2016 and 2015 was $69.29 and $67.17, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at April 30, 2016:

Options outstanding	26,021,155
Restricted stock awards and units and performance stock units outstanding	20,409,577
Stock available for future grant:
2013 Equity Incentive Plan	44,462,309
2014 Inducement Equity Incentive Plan	446,533
Amended and Restated 2004 Employee Stock Purchase Plan	6,844,796
Acquired equity plans	135,854
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	132,937,984

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Income Taxes

3 Months Ended

Apr. 30, 2016

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, 2016, the Company reported a tax benefit of $1.6 million on a pretax income of $37.2 million, which resulted in a negative effective tax rate of 4 percent. The Company recorded a net tax benefit due to income taxes in profitable jurisdictions outside of the United States offset by a discrete tax benefit from a partial release of the valuation allowance in connection with certain acquisitions. The net deferred tax liability from the acquisitions provided a source of additional income to support the realizability of the Company's pre-existing deferred tax assets and as a result, the Company released a portion of its valuation allowance.

As described in Note 1 “Summary of Business and Significant Accounting Policies,” the Company early adopted ASU 2016-09 in the three months ended April 30, 2016. As a result of adopting ASU 2016-09 and the Company's current valuation allowance position, the Company did not record a current tax expense associated with the United States jurisdiction.

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 the United States.

Tax Benefits Related to Stock-Based Compensation

The income tax benefit related to stock-based compensation was $51.4 million and $43.7 million for three months ended April 30, 2016 and 2015, 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. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Canada, France, Switzerland and the United Kingdom. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. However, the outcome of the tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future. Based on the information to-date, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled or as applicable statute of limitations lapse, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $15.0 million may occur in the next 12 months.

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Earnings Per Share

3 Months Ended

Apr. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income 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.

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

	Three Months Ended April 30,
	2016		2015
Numerator:
Net income	$	38,759	$	4,092
Denominator:
Weighted-average shares outstanding for basic income per share	677,514		653,809
Effect of dilutive securities:
Convertible senior notes	945		0
Employee stock awards	8,340		10,501
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted income per share	686,799		664,310

The weighted-average number of shares outstanding used in the computation of diluted earnings 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 per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2016	2015
Employee stock awards	21,321	8,801
Convertible senior notes	0	17,309
Warrants	17,309	17,309

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Commitments

3 Months Ended

Apr. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments

Letters of Credit

As of April 30, 2016, the Company had a total of $83.8 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, 2016, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation -Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2017	$	50,960		$	287,083	$	14,518
Fiscal 2018	122,765			351,971		21,437
Fiscal 2019	115,797			299,254		21,881
Fiscal 2020	201,579			239,804		22,325
Fiscal 2021	37			223,280		22,770
Thereafter	0			1,233,948		233,927
Total minimum lease payments	491,138			$	2,635,340	$	336,858
Less: amount representing interest	(42,438		)
Present value of capital lease obligations	$	448,700

______________ 

(1) Total Financing Obligation, Building -Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of April 30, 2016, $220.3 million of the total obligation noted above was recorded to Financing obligation, building - leased facility, of which the current portion is included in "Accounts payable, accrued expenses and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the consolidated balance sheets.

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 $2.6 billion, approximately $2.3 billion is related to facilities space. The remaining commitment amount is related to computer equipment and furniture and fixtures.

Other Purchase Commitments

In April 2016, the Company entered into an agreement with a third party provider for certain infrastructure services for a period of four years. The agreement provides that the Company will pay $70.0 million in fiscal 2017, $96.0 million in fiscal 2018, $108.0 million in fiscal 2019 and $126.0 million in fiscal 2020.

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Legal Proceedings and Claims

3 Months Ended

Apr. 30, 2016

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. 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 operating results 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 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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Related-Party Transactions

3 Months Ended

Apr. 30, 2016

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

In January 1999, the Salesforce.com Foundation, also referred to as the Foundation, was chartered on an idea of leveraging the Company’s people, technology, and resources to help improve communities around the world. The Company calls this integrated philanthropic approach the 1-1-1 model. Beginning in 2008, Salesforce.org, which is a non-profit public 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 holds one of the three Foundation board seats. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of Salesforce.org’s nine 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 and Salesforce.org’s inception, the Company has provided at no charge certain resources to those entities employees such as office space, furniture, equipment, facilities, services, and other resources. The value of these items was approximately $0.8 million for the three months ended April 30, 2016.

The resource sharing agreement was amended in August 2015 to include resources outside of the United States and is more explicit about the types of resources that the Company will provide.

Additionally, the Company has donated subscriptions of the Company’s services to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain education entities. The Company does not charge Salesforce.org for these subscriptions, therefore revenue from subscriptions provided to non-profit organizations is donated back to the community through charitable grants made by the Foundation and Salesforce.org. The reseller agreement was amended in August 2015 to include additional customer segments and certain customers outside the U.S. and in October 2015 to add an addendum with model clauses for the processing of personal data transferred from the European Economic Area. The value of the subscriptions pursuant to reseller agreements was approximately $27.8 million for the three months ended April 30, 2016. The Company plans to continue these programs.

As described in Note 4 “Business Combinations,” the Company's chairman held an ownership interest in an acquisition that was completed by the Company during the three months ended April 30, 2016.

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Summary of Business and Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2016

Accounting Policies [Abstract]

Fiscal Year

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ending January 31, 2017.

Basis of Presentation

Basis of Presentation

The accompanying consolidated balance sheet as of April 30, 2016 and the consolidated statements of operations, the consolidated statements of comprehensive income (loss) and the consolidated statements of cash flows for the three months ended April 30, 2016 and 2015, respectively, are unaudited. The consolidated balance sheet data as of January 31, 2016 was derived from the audited consolidated financial statements that are included in the Company’s fiscal 2016 Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2016. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s fiscal 2016 Form 10-K.

The accompanying 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 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, 2016, and its results of operations, including its comprehensive income (loss), and its cash flows for the three months ended April 30, 2016 and 2015. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2016 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2017.

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 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 useful lives of intangible assets, property and equipment and building and structural components, and

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

Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities.

Principles of Consolidation

Principles of Consolidation

The 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 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. 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 Company’s professional services contracts are either on a time and material or fixed fee 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 and 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. 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 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 consolidated statements of comprehensive income (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:

Computers, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years
Building and structural components	Average weighted useful life of 32 years
Building- leased facility	27 years
Building improvements	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 and Intangible Assets Impairment Assessments

Goodwill and Intangible Assets 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.

Long- Lived Assets and Impairment Assessment

Long-Lived Assets and Impairment Assessment

The Company evaluates long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset's carrying amount 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 consolidated statements of operations.

In the event that the Company enters into a business combination with an entity in which the Company previously held a strategic investment, significant gains or losses will be disclosed separately within the 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 to operating expense.

In the event the Company is the deemed owner for accounting purposes during construction, 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

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. The estimated life for the stock options was based on an analysis of historical exercise activity.

ESPP assumptions and the related fair value per share table will only be disclosed in the three month period in which there is ESPP activity, such as an ESPP purchase. The Company's ESPP Plan allows for two purchases during the year. The estimated life of the ESPP will be based on the two purchase periods within each offering period.

The risk-free interest rate 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.

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 aggregate stock compensation remaining to be amortized to costs and expenses will be recognized over a weighted average period of 2.2 years.The Company recognizes stock-based expenses related to shares issued pursuant to its Amended and Restated 2004 Employee Stock Purchase Plan (“ESPP” or “2004 Employee Stock Purchase Plan”) 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.

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 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 consolidated statements of comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (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 material liabilities related to such obligations in the accompanying 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 Pronouncements Adopted and Pending

New Accounting Pronouncements Adopted

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. However, ASU 2015-03 does not address deferred issuance costs for line-of-credit arrangements; therefore, in August 2015, the FASB issued Accounting Standards Update No. 2015-15, “Interest-Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 allows an entity to defer debt issuance costs associated with line-of-credit arrangements, including arrangements with no outstanding borrowings, and classify them as an asset, and amortize them over the term of the arrangements. The recognition and measurement guidance for debt issuance costs is not affected by the standards. The Company adopted the standards in the three months ended April 30, 2016. Upon adoption, the unamortized debt issuance costs previously reported in Other assets, net, with a carrying amount of approximately $7.9 million at January 31, 2016, were reclassified and presented as a deduction of the corresponding liabilities, Convertible 0.25% senior notes, net and Loan assumed on 50 Fremont.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments in business combinations. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The Company adopted this standard during the three months ending April 30, 2016 and there was no material impact of this on the Company's financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting” (“ASU 2016-09”) which simplifies and improves several aspects of the accounting for employee share-based payment transactions for public entities. The new guidance requires companies to record excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations when the awards vest or are settled, and eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the statement of cash flows. The Company early adopted the standard in the three months ended April 30, 2016.  Upon adoption, the Company recognized the previously unrecognized excess tax benefits using the modified retrospective transition method, which resulted in a cumulative-effect adjustment of $8.7 million to accumulated deficit. This adjustment reduced the April 30, 2016 accumulated deficit balance. The previously unrecognized excess tax effects were recorded as a deferred tax asset, which was fully offset by a valuation allowance. Without the valuation allowance, the Company’s deferred tax asset would have increased by $614.5 million. The Company also elected to apply the change in presentation to the statements of cash flows retrospectively and no longer classified the excess tax benefits from employee stock plans as a reduction from operating cash flows for all periods presented.   

Pending Accounting Pronouncements

In May 2014, the 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. The FASB deferred the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP for one year. 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 consolidated financial statements and has not determined whether the effect will be material to either its revenue results or its deferred commissions balances.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact to its consolidated financial statements.

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Summary of Business and Significant Accounting Policies (Tables)

3 Months Ended

Apr. 30, 2016

Accounting Policies [Abstract]

Revenues By Geographical Region

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

	Three Months Ended April 30,
	2016		2015
Americas	$	1,413,229	$	1,115,120
Europe	327,854		258,805
Asia Pacific	175,520		137,242
	$	1,916,603	$	1,511,167

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:

Computers, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of the estimated lease term or 10 years
Building and structural components	Average weighted useful life of 32 years
Building- leased facility	27 years
Building improvements	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	2016			2015
Volatility	32.1		%	37.4		%
Estimated life	3.5 years			3.6 years
Risk-free interest rate	0.9-1.0		%	1.13-1.36		%
Weighted-average fair value per share of grants	$	17.35		$	19.52

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Investments (Tables)

3 Months Ended

Apr. 30, 2016

Investments Schedule [Abstract]

Schedule of Marketable Securities

At April 30, 2016, 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	$	1,089,511	$	5,661	$	(1,277	)	$	1,093,895
U.S. treasury securities	221,467		783		(39		)	222,211
Mortgage backed obligations	125,778		213		(174		)	125,817
Asset backed securities	334,894		481		(190		)	335,185
Municipal securities	74,987		319		(86		)	75,220
Foreign government obligations	31,898		79		(3		)	31,974
U.S. agency obligations	32,058		20		(11		)	32,067
Total marketable securities	$	1,910,593	$	7,556	$	(1,780	)	$	1,916,369

At January 31, 2016, 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	$	949,266	$	1,398	$	(2,983	)	$	947,681
U.S. treasury securities	157,625		375		(56		)	157,944
Mortgage backed obligations	104,242		106		(323		)	104,025
Asset backed securities	271,292		186		(226		)	271,252
Municipal securities	44,934		209		(6		)	45,137
Foreign government obligations	18,014		42		(5		)	18,051
U.S. agency obligations	16,076		16		(6		)	16,086
Covered bonds	6,690		148		0			6,838
Total marketable securities	$	1,568,139	$	2,480	$	(3,605	)	$	1,567,014

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, 2016		January 31, 2016
Recorded as follows:
Short-term (due in one year or less)	$	232,109	$	183,018
Long-term (due after one year)	1,684,260		1,383,996
	$	1,916,369	$	1,567,014

Schedule of Marketable Securities in a Unrealized Loss Position

As of April 30, 2016, 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	$	272,239	$	(813	)	$	61,847	$	(464	)	$	334,086	$	(1,277	)
U.S. treasury securities	47,552		(39		)	0		0			47,552		(39		)
Mortgage backed obligations	52,427		(126		)	8,986		(48		)	61,413		(174		)
Asset backed securities	106,226		(148		)	12,371		(42		)	118,597		(190		)
Municipal securities	18,065		(86		)	0		0			18,065		(86		)
Foreign government obligations	7,650		(3		)	0		0			7,650		(3		)
U.S. agency obligations	13,481		(11		)	0		0			13,481		(11		)
	$	517,640	$	(1,226	)	$	83,204	$	(554	)	$	600,844	$	(1,780	)

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, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	347,815	$	0	$	347,815
Money market mutual funds	868,519		0		0		868,519
Agency and sovereign paper	0		2,904		0		2,904
Marketable securities:
Corporate notes and obligations	0		1,093,895		0		1,093,895
U.S. treasury securities	0		222,211		0		222,211
Mortgage backed obligations	0		125,817		0		125,817
Asset backed securities	0		335,185		0		335,185
Municipal securities	0		75,220		0		75,220
Foreign government obligations	0		31,974		0		31,974
U.S. agency obligations	0		32,067		0		32,067
Foreign currency derivative contracts (2)	0		19,871		0		19,871
Total Assets	$	868,519	$	2,286,959	$	0	$	3,155,478
Liabilities
Foreign currency derivative contracts (3)	$	0	$	7,973	$	0	$	7,973
Total Liabilities	$	0	$	7,973	$	0	$	7,973

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of April 30, 2016, in addition to $579.8 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of April 30, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the consolidated balance sheet as of April 30, 2016.

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of January 31, 2016 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, 2016
Cash equivalents (1):
Time deposits	$	0	$	236,798	$	0	$	236,798
Money market mutual funds	216,107		0		0		216,107
Commercial paper	0		159,230		0		159,230
Agency and sovereign paper	0		13,599		0		13,599
Marketable securities:
Corporate notes and obligations	0		947,681		0		947,681
U.S. treasury securities	0		157,944		0		157,944
Mortgage backed obligations	0		104,025		0		104,025
Asset backed securities	0		271,252		0		271,252
Municipal securities	0		45,137		0		45,137
Foreign government obligations	0		18,051		0		18,051
U.S. agency obligations	0		16,086		0		16,086
Covered bonds	0		6,838		0		6,838
Foreign currency derivative contracts (2)	0		4,731		0		4,731
Total Assets	$	216,107	$	1,981,372	$	0	$	2,197,479
Liabilities
Foreign currency derivative contracts (3)	$	0	$	14,025	$	0	$	14,025
Total Liabilities	$	0	$	14,025	$	0	$	14,025

______________ 

(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31, 2016, in addition to $532.6 million of cash.

(2)Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as of January 31, 2016.

(3)Included in “accounts payable, accrued expenses and other liabilities” in the accompanying consolidated balance sheet as of January 31, 2016.

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, 2016		January 31, 2016
Notional amount of foreign currency derivative contracts	$	1,513,108	$	1,274,515
Fair value of foreign currency derivative contracts	$	11,898	$	(9,294	)

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, 2016		January 31, 2016
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	19,871	$	4,731
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	7,973	$	14,025

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 consolidated statements of operations during the three months ended April 30, 2016 and 2015, 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	2016			2015
Foreign currency derivative contracts	Other expense	$	(1,442	)	$	11,459

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,
	2016			2015
Interest income	$	7,773		$	3,049
Realized gains	1,054			2,128
Realized losses	(705		)	(616		)
Total investment income	$	8,122		$	4,561

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Property and Equipment (Tables)

3 Months Ended

Apr. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of Property And Equipment

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

	As of
	April 30, 2016			January 31, 2016
Land	$	183,888		$	183,888
Buildings and building improvements	618,510			614,081
Computers, equipment and software	1,321,660			1,281,766
Furniture and fixtures	85,327			82,242
Leasehold improvements	499,108			473,688
	$	2,708,493		$	2,635,665
Less accumulated depreciation and amortization	(997,021		)	(919,837		)
	$	1,711,472		$	1,715,828

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Business Combinations (Tables) - SteelBrick, Inc.

3 Months Ended

Apr. 30, 2016

Business Acquisition [Line Items]

Schedule of Consideration Transferred

The preliminary acquisition date fair value consideration transferred for SteelBrick was approximately $314.8 million, which consisted of the following (in thousands, except for share data):

	Fair Value
Cash	$	1,698
Common stock (4,288,447 shares)	278,372
Fair value of stock options and restricted stock awards assumed	10,989
Fair value of pre-existing relationship	23,726
Total	$	314,785

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

	Fair Value
Cash and cash equivalents	$	59,296
Other current and noncurrent tangible assets	3,012
Customer contract asset, current and noncurrent	16,903
Intangible assets	49,160
Goodwill	217,986
Deferred revenue, current and noncurrent	(8,479		)
Customer liability, current and noncurrent	(9,949		)
Other liabilities, current and noncurrent	(2,665		)
Deferred tax liability	(10,479		)
Net assets acquired	$	314,785

Schedule of Identifiable Intangible Assets Acquired

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition.

	Fair Value		Useful Life
Developed technology	$	30,700	4 years
Customer relationships	17,110		7 years
Other purchased intangible assets	1,350		1 year
Total intangible assets subject to amortization	$	49,160

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Debt (Tables)

3 Months Ended

Apr. 30, 2016

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, 2016			January 31, 2016
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,095,104	(2)	$	1,088,097	(2)

___________ 

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

(2)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

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, 2016			January 31, 2016
Liability component :
Principal (1)	$	1,150,000		$	1,150,000
Less: debt discount, net (2)	(48,753		)	(54,941		)
Less: debt issuance cost (3)	(6,143		)	(6,962		)
Net carrying amount	$	1,095,104		$	1,088,097

(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 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.

(3)In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented.

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 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended April 30,
	2016		2015
Contractual interest expense	$	2,814	$	3,350
Amortization of debt issuance costs	1,028		1,018
Amortization of debt discount	6,226		6,059
	$	10,068	$	10,427

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Other Balance Sheet Accounts (Tables)

3 Months Ended

Apr. 30, 2016

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, 2016		January 31, 2016
Prepaid income taxes	24,329		22,044
Other taxes receivable	28,117		27,341
Prepaid expenses and other current assets	254,179		201,209
	$	306,625	$	250,594

Schedule of Capitalized Software Costs

Capitalized software consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Capitalized internal-use software development costs, net of accumulated amortization of $201,292 and $186,251, respectively	$	131,376	$	123,065
Acquired developed technology, net of accumulated amortization of $505,147 and $481,118, respectively	275,654		261,193
	$	407,030	$	384,258

Schedule of Goodwill

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2016	$	3,849,937
Steelbrick	217,986
MetaMind	31,242
Other business combinations	30,554
Finalization of acquisition date fair values	(63		)
Balance as of April 30, 2016	$	4,129,656

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes, noncurrent, net	$	17,597	$	15,986
Long-term deposits	23,650		19,469
Purchased intangible assets, net of accumulated amortization of $228,704 and $212,248, respectively	267,722		258,580
Acquired intellectual property, net of accumulated amortization of $24,186 and $22,439, respectively	10,564		10,565
Other (1)	89,652		66,310
	$	409,185	$	370,910

(1) In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company retrospectively adopted this standard for the prior period presented, which resulted in an adjustment of $7.9 million to Other.

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, 2016		January 31, 2016
Accounts payable	$	54,583	$	71,481
Accrued compensation	386,410		554,502
Accrued other liabilities	433,631		454,287
Accrued income and other taxes payable	154,550		205,781
Accrued professional costs	30,095		33,814
Accrued rent	15,789		14,071
Financing obligation - leased facility, current (2)	18,139		15,402
	$	1,093,197	$	1,349,338

Schedule of Other Noncurrent Liabilities

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

	As of
	April 30, 2016		January 31, 2016
Deferred income taxes and income taxes payable	$	85,579	$	85,996
Financing obligation - leased facility (2)	202,246		196,711
Long-term lease liabilities and other	551,900		550,358
	$	839,725	$	833,065

(2) As of January 31, 2016, 350 Mission was in construction. In March 2016, construction was completed on the building.

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Stockholders' Equity (Tables)

3 Months Ended

Apr. 30, 2016

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, 2016	46,879,908		26,258,798		$	56.26
Increase in shares authorized:
2013 Equity Incentive Plan	80,332
2014 Inducement Equity Incentive Plan	11,049
Assumed equity plans	584,392
Options granted under all plans	(867,292	)	867,292		40.58
Restricted stock activity	(1,821,324	)
Performance restricted stock units	0
Stock grants to board and advisory board members	(44,026	)
Exercised	0		(854,362	)	38.23
Plan shares expired	(28,916	)
Canceled	250,573		(250,573	)	67.73
Balance as of April 30, 2016	45,044,696		26,021,155		$	56.22	$	538,367,465
Vested or expected to vest			23,947,836		$	55.11	$	519,312,755
Exercisable as of April 30, 2016			10,372,672		$	43.12	$	338,995,305

Schedule Of Stock Options Outstanding

The following table summarizes information about stock options outstanding as of April 30, 2016:

	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 $37.95	4,461,075	2.3	$	27.45	3,691,607	$	28.16
$38.03 to $52.14	2,480,093	2.0	39.87		1,934,518	39.57
$52.30	3,684,201	4.6	52.30		2,012,682	52.30
$53.60 to $57.79	1,414,340	5.1	55.31		514,062	55.35
$59.34	6,138,145	5.6	59.34		2,015,280	59.34
$59.37 to $77.86	2,326,108	6.2	68.62		204,523	65.72
$80.99	5,517,193	6.6	80.99		0	0.00
	26,021,155	4.8	$	56.22	10,372,672	$	43.12

Schedule Of Restricted Stock Activity

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2016	21,294,585		$	0.001
Granted- restricted stock units and awards	1,468,220		0.001
Canceled	(512,280	)	0.001
Vested and converted to shares	(1,840,948	)	0.001
Balance as of April 30, 2016	20,409,577		$	0.001	$	1,547,045,937
Expected to vest	17,223,868				$	1,305,569,194

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, 2016:

Options outstanding	26,021,155
Restricted stock awards and units and performance stock units outstanding	20,409,577
Stock available for future grant:
2013 Equity Incentive Plan	44,462,309
2014 Inducement Equity Incentive Plan	446,533
Amended and Restated 2004 Employee Stock Purchase Plan	6,844,796
Acquired equity plans	135,854
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	132,937,984

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Earnings Per Share (Tables)

3 Months Ended

Apr. 30, 2016

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 per share is as follows (in thousands):

	Three Months Ended April 30,
	2016		2015
Numerator:
Net income	$	38,759	$	4,092
Denominator:
Weighted-average shares outstanding for basic income per share	677,514		653,809
Effect of dilutive securities:
Convertible senior notes	945		0
Employee stock awards	8,340		10,501
Warrants	0		0
Adjusted weighted-average shares outstanding and assumed conversions for diluted income per share	686,799		664,310

Shares Excluded From Diluted Earnings Or Loss Per Share

The weighted-average number of shares outstanding used in the computation of diluted earnings 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 per share because the effect would have been anti-dilutive (in thousands):

	Three Months Ended April 30,
	2016	2015
Employee stock awards	21,321	8,801
Convertible senior notes	0	17,309
Warrants	17,309	17,309

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Commitments (Tables)

3 Months Ended

Apr. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

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

As of April 30, 2016, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation -Leased Facility(1)
Fiscal Period:
Remaining nine months of fiscal 2017	$	50,960		$	287,083	$	14,518
Fiscal 2018	122,765			351,971		21,437
Fiscal 2019	115,797			299,254		21,881
Fiscal 2020	201,579			239,804		22,325
Fiscal 2021	37			223,280		22,770
Thereafter	0			1,233,948		233,927
Total minimum lease payments	491,138			$	2,635,340	$	336,858
Less: amount representing interest	(42,438		)
Present value of capital lease obligations	$	448,700

______________ 

(1) Total Financing Obligation, Building -Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of April 30, 2016, $220.3 million of the total obligation noted above was recorded to Financing obligation, building - leased facility, of which the current portion is included in "Accounts payable, accrued expenses and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the consolidated balance sheets.

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Summary of Business and Significant Accounting Policies - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Apr. 30, 2016 USD ($) customer segment country	Apr. 30, 2015 USD ($) customer country	Jan. 31, 2016 customer
Concentration Risk [Line Items]
Number of operating segments | segment	1
Percentage of tax benefit likely to be realized upon settlement (greater than 50%)	50.00%
Impairment of long-lived assets | $	$ 0	$ 0
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	97.00%	95.00%
Revenue | Geographic Concentration Risk | All Other Countries
Concentration Risk [Line Items]
Countries exceeding concentration of total revenue threshold, number | country	0	0
Assets | Geographic Concentration Risk | Outside Americas
Concentration Risk [Line Items]
Concentration risk percentage	11.00%		11.00%
Minimum
Concentration Risk [Line Items]
Deferred and amortized commission period	12 months
Maximum
Concentration Risk [Line Items]
Deferred and amortized commission period	36 months

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Summary of Business and Significant Accounting Policies - Revenues by Geographical Region (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 1,916,603	$ 1,511,167
Reportable Geographical Components [Member] | Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,413,229	1,115,120
Reportable Geographical Components [Member] | Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	327,854	258,805
Reportable Geographical Components [Member] | Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 175,520	$ 137,242

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Summary of Business and Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Detail)	3 Months Ended
	Apr. 30, 2016
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Building, Leased Facility [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	27 years
Building and structural components
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	32 years
Building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	10 years
Minimum | Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Minimum | Internal-use software
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 | Internal-use software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years

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Summary of Business and Significant Accounting Policies - Accounting for Stock-Based Expense (Detail)	3 Months Ended
	Apr. 30, 2016 purchase_period $ / shares	Apr. 30, 2015 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Period for recognition	2 years 2 months 12 days
Offering period	12 months
Expected dividend yield	0.00%
Number of purchase periods | purchase_period	2
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	32.10%	37.40%
Estimated life	3 years 6 months	3 years 7 months
Risk-free interest rate, minimum	0.90%	1.13%
Risk-free interest rate, maximum	1.00%	1.36%
Weighted-average fair value per share of grants (in dollars per share) | $ / shares	$ 17.35	$ 19.52

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Summary of Business and Significant Accounting Policies - New Accounting Pronouncements Adopted (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Jan. 31, 2016
0.25% Convertible Senior Notes due April 1, 2018 | Notes Payable to Banks
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contractual interest rate	0.25%	0.25%
Accounting Standards Update 2015-03 [Member] | Other Noncurrent Assets [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unamortized debt issuance costs		$ 7.9
Accounting Standards Update 2015-03 [Member] | Convertible 0.25% Senior Notes, Net and Loan Assumed on 50 Fremont [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unamortized debt issuance costs		(7.9)
Accounting Standards Update 2016-09 [Member] | New Accounting Pronouncement, Early Adoption, Effect [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in deferred tax assets If no valuation allowance recorded	$ 614.5
Accounting Standards Update 2016-09 [Member] | New Accounting Pronouncement, Early Adoption, Effect [Member] | Retained Earnings [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reduction of accumulated deficit balance		$ 8.7

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Investments - Schedule of Marketable Securities (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,910,593	$ 1,568,139
Unrealized Gains	7,556	2,480
Unrealized Losses	(1,780)	(3,605)
Fair Value	1,916,369	1,567,014
Corporate notes and obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,089,511	949,266
Unrealized Gains	5,661	1,398
Unrealized Losses	(1,277)	(2,983)
Fair Value	1,093,895	947,681
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	221,467	157,625
Unrealized Gains	783	375
Unrealized Losses	(39)	(56)
Fair Value	222,211	157,944
Mortgage backed obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	125,778	104,242
Unrealized Gains	213	106
Unrealized Losses	(174)	(323)
Fair Value	125,817	104,025
Asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	334,894	271,292
Unrealized Gains	481	186
Unrealized Losses	(190)	(226)
Fair Value	335,185	271,252
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	74,987	44,934
Unrealized Gains	319	209
Unrealized Losses	(86)	(6)
Fair Value	75,220	45,137
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	31,898	18,014
Unrealized Gains	79	42
Unrealized Losses	(3)	(5)
Fair Value	31,974	18,051
U.S. agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	32,058	16,076
Unrealized Gains	20	16
Unrealized Losses	(11)	(6)
Fair Value	$ 32,067	16,086
Covered bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		6,690
Unrealized Gains		148
Unrealized Losses		0
Fair Value		$ 6,838

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Investments - Schedule of Short-Term and Long-Term Marketable Securities (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Short-term (due in one year or less)	$ 232,109	$ 183,018
Long-term (due after one year)	1,684,260	1,383,996
Fair Value of Marketable Securities	$ 1,916,369	$ 1,567,014

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Investments - Schedule of Marketable Securities in Unrealized Loss Position (Detail) $ in Thousands	Apr. 30, 2016 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	$ 517,640
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(1,226)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	83,204
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(554)
Marketable securities in an unrealized loss position, Fair Value	600,844
Marketable securities in an unrealized loss position, Unrealized Losses	(1,780)
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	272,239
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(813)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	61,847
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(464)
Marketable securities in an unrealized loss position, Fair Value	334,086
Marketable securities in an unrealized loss position, Unrealized Losses	(1,277)
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	47,552
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(39)
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	47,552
Marketable securities in an unrealized loss position, Unrealized Losses	(39)
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	52,427
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(126)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	8,986
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(48)
Marketable securities in an unrealized loss position, Fair Value	61,413
Marketable securities in an unrealized loss position, Unrealized Losses	(174)
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	106,226
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(148)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	12,371
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(42)
Marketable securities in an unrealized loss position, Fair Value	118,597
Marketable securities in an unrealized loss position, Unrealized Losses	(190)
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	18,065
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(86)
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	18,065
Marketable securities in an unrealized loss position, Unrealized Losses	(86)
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	7,650
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	7,650
Marketable securities in an unrealized loss position, Unrealized Losses	(3)
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	13,481
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(11)
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	13,481
Marketable securities in an unrealized loss position, Unrealized Losses	$ (11)

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Investments - Additional Information (Detail)	3 Months Ended
	Apr. 30, 2016 USD ($) investment	Jan. 31, 2016 USD ($) investment
Investment Holdings [Line Items]
Unrealized losses on fixed rate investments, upper range value	$ 98,000
Strategic Investments
Investment Holdings [Line Items]
Number of investments in marketable equity securities | investment	6	6
Unrealized gain on marketable equity securities	$ 13,100,000	$ 8,500,000
non-marketable debt and equity securities	500,300,000	504,500,000
non-marketable debt and equity securities, unrealized gains	206,600,000	209,600,000
Strategic Investments | Significant Unobservable Inputs (Level 3) | Estimate of Fair Value Measurement [Member] | Cost Approach Valuation Technique [Member]
Investment Holdings [Line Items]
non-marketable debt and equity securities, estimated fair value	706,900,000	714,100,000
Strategic Investments | Equity Securities
Investment Holdings [Line Items]
Fair value of marketable equity securities	$ 20,400,000	$ 16,200,000

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Investments - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 579,800	$ 532,600
Recurring measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		6,838
Total Assets	3,155,478	2,197,479
Total Liabilities	7,973	14,025
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	868,519	216,107
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		6,838
Total Assets	2,286,959	1,981,372
Total Liabilities	7,973	14,025
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	19,871	4,731
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	19,871	4,731
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	7,973	14,025
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	7,973	14,025
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	347,815	236,798
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	347,815	236,798
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	868,519	216,107
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	868,519	216,107
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 | Commercial paper | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		159,230
Recurring measurement | Commercial paper | 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
Recurring measurement | Commercial paper | 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		159,230
Recurring measurement | Commercial paper | 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
Recurring measurement | Agency and sovereign paper | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	2,904	13,599
Recurring measurement | Agency and sovereign paper | 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 | Agency and sovereign paper | 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	2,904	13,599
Recurring measurement | Agency and sovereign paper | 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	1,093,895	947,681
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	1,093,895	947,681
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	222,211	157,944
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	222,211	157,944
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	125,817	104,025
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	125,817	104,025
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	335,185	271,252
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	335,185	271,252
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	75,220	45,137
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	75,220	45,137
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	31,974	18,051
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	31,974	18,051
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	32,067	16,086
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	32,067	16,086
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

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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	Apr. 30, 2016	Jan. 31, 2016
Derivative [Line Items]
Fair value of foreign currency derivative contracts	$ 11,898	$ (9,294)
Foreign currency derivative contracts
Derivative [Line Items]
Notional amount of foreign currency derivative contracts	$ 1,513,108	$ 1,274,515

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Investments - Fair Value of Outstanding Derivative Instruments (Detail) - Derivatives not designated as hedging instruments - Foreign currency derivative contracts - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 19,871	$ 4,731
Accounts payable, accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative Liabilities	$ 7,973	$ 14,025

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Investments - Effect of Derivative Instruments Not Designated as Hedging Instruments on Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
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	$ (1,442)	$ 11,459

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Investments - Schedule of Components of Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Interest income	$ 7,773	$ 3,049
Realized gains	1,054	2,128
Realized losses	(705)	(616)
Total investment income	$ 8,122	$ 4,561

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Property and Equipment (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,708,493	$ 2,635,665
Less accumulated depreciation and amortization	(997,021)	(919,837)
Property and equipment, net	1,711,472	1,715,828
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	183,888	183,888
Buildings and building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	618,510	614,081
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,321,660	1,281,766
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	85,327	82,242
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 499,108	$ 473,688

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Property and Equipment - Additional Information (Detail) ft² in Thousands	3 Months Ended
	Apr. 30, 2016 USD ($)	Apr. 30, 2015 USD ($)	Jan. 31, 2016 USD ($)	Dec. 31, 2013 ft²
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 75,600,000	$ 72,500,000
Fixed assets acquired under capital lease agreements	748,400,000		$ 747,100,000
Net rentable area (in square feet) | ft²				445
Property and equipment, gross	2,708,493,000		2,635,665,000
Financing obligation - leased facility, current	18,139,000		15,402,000
Financing obligation - leased facility	202,246,000		196,711,000
Expected financing obligation	336,858,000
Impairment of long-lived assets	0	$ 0
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Accumulated depreciation and amortization	335,500,000		310,300,000
Property and equipment, gross	1,321,660,000		1,281,766,000
Buildings and building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	618,510,000		614,081,000
Construction costs capitalized
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 178,800,000		$ 174,600,000

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Business Combinations (Narrative) (Details) $ in Thousands	1 Months Ended		3 Months Ended
	Apr. 30, 2016 USD ($)	Feb. 29, 2016 USD ($)	Apr. 30, 2016 USD ($) company	Apr. 30, 2015 USD ($)	Jan. 31, 2016 USD ($)
Business Acquisition [Line Items]
Business combinations, net of cash acquired			$ 1,799	$ 12,470
SteelBrick, Inc.
Business Acquisition [Line Items]
Investment owned					$ 13,900
SteelBrick, Inc.
Business Acquisition [Line Items]
Percentage of acquired platform delivered on parent company platform		100.00%
Share conversion ratio		0.08
Fair value of equity interest in acquiree		$ 23,726
Equity interest in acquiree		6.00%
Remeasurement gain		$ 9,800
Equity interest issued or issuable		39,600
Fair value of stock options and restricted stock awards assumed		10,989
Allocated to future services		28,600
Consideration transferred		$ 314,785
MetaMind [Member]
Business Acquisition [Line Items]
Equity interest issued or issuable	$ 5,500		5,500
Fair value of stock options and restricted stock awards assumed	500
Allocated to future services	5,000		5,000
Business combinations, net of cash acquired	32,800
Goodwill acquired	31,200		$ 31,242
MetaMind [Member] | CEO and Chairman of MetaMind [Member]
Business Acquisition [Line Items]
Consideration transferred	$ 6,000
Ownership percentage (greater than 10%)	10.00%		10.00%
Other Business Combination
Business Acquisition [Line Items]
Number of businesses acquired | company			2
Business combinations, net of cash acquired			$ 41,600
Goodwill acquired			$ 30,554

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Business Combinations (Consideration Transferred) (Details) - SteelBrick, Inc. $ in Thousands	1 Months Ended
	Feb. 29, 2016 USD ($) shares
Business Acquisition [Line Items]
Cash	$ 1,698
Common stock	278,372
Fair value of stock options and restricted stock awards assumed	10,989
Fair value of pre-existing relationship	23,726
Total	$ 314,785
Common Stock
Business Acquisition [Line Items]
Common stock (in shares) | shares	4,288,447

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Business Combinations (Estimated Fair Values of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands	Apr. 30, 2016	Feb. 29, 2016	Jan. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 4,129,656		$ 3,849,937
SteelBrick, Inc.
Business Acquisition [Line Items]
Cash and cash equivalents		$ 59,296
Other current and noncurrent tangible assets		3,012
Customer contract asset, current and noncurrent		16,903
Intangible assets		49,160
Goodwill		217,986
Deferred revenue, current and noncurrent		(8,479)
Customer liability, current and noncurrent		(9,949)
Other liabilities, current and noncurrent		(2,665)
Deferred tax liability		(10,479)
Net assets acquired		$ 314,785

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Business Combinations (Intangible Assets Acquired From Business Combinations) (Details) - SteelBrick, Inc. $ in Thousands	1 Months Ended
	Feb. 29, 2016 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	$ 49,160
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	$ 30,700
Useful Life	4 years
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	$ 17,110
Useful Life	7 years
Other purchased intangible assets
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	$ 1,350
Useful Life	1 year

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Debt - Summary of Convertible Senior Notes (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016	Mar. 31, 2013
Debt Conversion [Line Items]
Convertible 0.25% senior notes, net	$ 1,095,104	$ 1,088,097
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	$ 1,095,104	$ 1,088,097
Contractual interest rate	0.25%		0.25%

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Debt - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended
	Oct. 31, 2014	Apr. 30, 2016	Apr. 30, 2015	Mar. 31, 2013
Debt Instrument [Line Items]
Amount outstanding		$ 0
Debt instrument, interest expense		$ 10,068,000	$ 10,427,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 650,000,000
Fee on undrawn amount of revolver		0.15%
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		$ 1,500,000,000
Fair value debt basis amount		$ 100
Closing prices of Company's common stock		$ 75.80
If-converted value in excess of principal		$ 162,000,000
Mortgage Loan | 50 Fremont Street
Debt Instrument [Line Items]
Contractual interest rate		3.75%
Loan assumed on 50 Fremont		$ 200,000,000
Debt instrument, interest expense		$ 1,900,000

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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	3 Months Ended
	Apr. 30, 2016 $ / shares
Debt Instrument [Line Items]
Conversion Rate per $1,000 Par Value	0.0150512
Initial Conversion Price per Share	$ 66.44

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Debt - Schedule of Convertible Senior Notes (Detail) - Convertible Debt - 0.25% Convertible Senior Notes due April 1, 2018 - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016	Mar. 31, 2013
Debt Instrument [Line Items]
Principal	$ 1,150,000	$ 1,150,000
Less: debt discount, net	(48,753)	(54,941)
Less: debt issuance cost	(6,143)	(6,962)
Net carrying amount	$ 1,095,104	$ 1,088,097
Contractual interest rate	0.25%		0.25%
Effective interest rates of Senior Notes	2.53%

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Debt - Summary of Hedge Notes (Detail) - Convertible Debt - 0.25% Note Hedges $ in Thousands	3 Months Ended
	Apr. 30, 2016 USD ($) shares
Derivatives, Fair Value [Line Items]
Purchase | $	$ 153,800
Shares | shares	17,308,880

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Debt - Components of Warrants (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 30, 2016 USD ($) $ / shares shares
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) | $ / shares	$ 90.40

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Debt - Schedule of Interest Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Debt Disclosure [Abstract]
Contractual interest expense	$ 2,814	$ 3,350
Amortization of debt issuance costs	1,028	1,018
Amortization of debt discount	6,226	6,059
Debt Instrument, Interest Expense, Total	$ 10,068	$ 10,427

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Other Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid income taxes	$ 24,329	$ 22,044
Other taxes receivable	28,117	27,341
Prepaid expenses and other current assets	254,179	201,209
Prepaid expenses and other current assets	$ 306,625	$ 250,594

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Other Balance Sheet Accounts - Schedule of Capitalized Software Costs (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Property, Plant and Equipment [Line Items]
Capitalized software costs	$ 407,030	$ 384,258
Capitalized internal-use software development costs, net of accumulated amortization of $201,292 and $186,251, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	131,376	123,065
Accumulated amortization	201,292	186,251
Acquired developed technology, net of accumulated amortization of $505,147 and $481,118, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	275,654	261,193
Accumulated amortization	$ 505,147	$ 481,118

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Other Balance Sheet Accounts - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Purchased intangible assets
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	$ 16.5	$ 20.0
Acquired intellectual property
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	1.7	1.7
Capitalized internal-use software development costs
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	15.0	11.3
Capitalized stock based compensation	1.8	1.6
Acquired developed technology
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	$ 24.0	$ 21.9

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Other Balance Sheet Accounts - Goodwill (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2016
Goodwill [Roll Forward]
Balance as of January 31, 2016		$ 3,849,937
Finalization of acquisition date fair values		(63)
Balance as of April 30, 2016	$ 4,129,656	4,129,656
MetaMind [Member]
Goodwill [Roll Forward]
Goodwill acquired	$ 31,200	31,242
Other Business Combination
Goodwill [Roll Forward]
Goodwill acquired		$ 30,554

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Other Balance Sheet Accounts - Schedule of Other Assets (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Deferred income taxes, noncurrent, net	$ 17,597	$ 15,986
Long-term deposits	23,650	19,469
Other	89,652	66,310
Other assets, net	409,185	370,910
Accounting Standards Update 2015-03 [Member] | Other Noncurrent Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Unamortized debt issuance costs		7,900
Purchased intangible assets, net of accumulated amortization of $228,704 and $212,248, respectively
Finite-Lived Intangible Assets [Line Items]
Purchase and acquired intangible assets	267,722	258,580
Accumulated amortization	228,704	212,248
Acquired intellectual property, net of accumulated amortization of $24,186 and $22,439, respectively
Finite-Lived Intangible Assets [Line Items]
Purchase and acquired intangible assets	10,564	10,565
Accumulated amortization	$ 24,186	$ 22,439

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Other Balance Sheet Accounts - Schedule of Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Payables and Accruals [Abstract]
Accounts payable	$ 54,583	$ 71,481
Accrued compensation	386,410	554,502
Accrued other liabilities	433,631	454,287
Accrued income and other taxes payable	154,550	205,781
Accrued professional costs	30,095	33,814
Accrued rent	15,789	14,071
Financing obligation - leased facility, current	18,139	15,402
Accrued expenses and other current liabilities	$ 1,093,197	$ 1,349,338

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Other Balance Sheet Accounts - Schedule of Other Non current Liabilities (Detail) - USD ($) $ in Thousands	Apr. 30, 2016	Jan. 31, 2016
Payables and Accruals [Abstract]
Deferred income taxes and income taxes payable	$ 85,579	$ 85,996
Financing obligation - leased facility	202,246	196,711
Long-term lease liabilities and other	551,900	550,358
Other noncurrent liabilities	$ 839,725	$ 833,065

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Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		12 Months Ended	33 Months Ended	90 Months Ended
	Jan. 31, 2006	Apr. 30, 2016	Apr. 30, 2015	Jan. 31, 2016	Apr. 30, 2016	Jul. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		4 years
Total intrinsic value of the options exercised during the period		$ 28.6	$ 113.3
Weighted-average remaining contractual life of vested and expected to vest options (in years)		4 years 8 months 12 days
Options vested		10,372,672			10,372,672
Weighted average exercise price vested		$ 43.12			$ 43.12
Weighted-average contractual life of vested and expected to vest options (in years)		3 years 3 months 18 days
Intrinsic value of vested options		$ 339.0			$ 339.0
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		$ 69.29	$ 67.17
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
Performance restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				3 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		$ 93.9			$ 93.9

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Stockholders' Equity - Stock Activity (Detail)	3 Months Ended
	Apr. 30, 2016 USD ($) $ / shares shares
Shares available for grant
Shares Available for Grant, Balance	46,879,908
Shares Available for Grant, Options granted under all plans	(867,292)
Shares Available for Grant, Exercised	0
Shares Available for Grant, Expired	(28,916)
Shares Available for Grant, Cancelled	250,573
Shares Available for Grant, Balance	45,044,696
Outstanding Stock Options
Outstanding Stock Options, Balance	26,258,798
Outstanding Stock Options	867,292
Outstanding Stock Options, Exercised	(854,362)
Outstanding Stock Options, Plan shares expired
Outstanding Stock Options, Cancelled	(250,573)
Outstanding Stock Options, Balance	26,021,155
Outstanding Stock Options, Vested or expected to vest	23,947,836
Outstanding Stock Options, Exercisable	10,372,672
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Balance | $ / shares	$ 56.26
Weighted- Average Exercise Price, Options | $ / shares	40.58
Weighted- Average Exercise Price, Exercised | $ / shares	38.23
Weighted- Average Exercise Price, Cancelled | $ / shares	$ 67.73
Weighted- Average Exercise Price, Expired | $ / shares
Weighted- Average Exercise Price, Balance | $ / shares	$ 56.22
Weighted- Average Exercise Price, Vested or expected to vest | $ / shares	55.11
Weighted- Average Exercise Price, Exercisable | $ / shares	$ 43.12
Aggregate Intrinsic Value
Weighted- Average Exercise Price, Balance | $	$ 538,367,465
Weighted- Average Exercise Price, Vested or expected to vest | $	519,312,755
Weighted- Average Exercise Price, Exercisable | $	$ 338,995,305
Restricted stock units and awards
Shares available for grant
Shares Available for Grant, Restricted stock activity	(1,821,324)
Outstanding Stock Options
Outstanding Stock Options
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares
Performance restricted stock units
Shares available for grant
Shares Available for Grant, Restricted stock activity	0
Outstanding Stock Options
Outstanding Stock Options
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares
Stock grants to board and advisory board members
Shares available for grant
Shares Available for Grant, Stock grants to board and advisory board members	(44,026)
Outstanding Stock Options
Outstanding Stock Options
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares
2013 Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	80,332
Shares Available for Grant, Balance	44,462,309
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares
2014 Inducement Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	11,049
Shares Available for Grant, Balance	446,533
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares
Acquired equity plans
Shares available for grant
Shares Available for Grant, Increase in shares authorized	584,392
Shares Available for Grant, Balance	135,854
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares

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Stockholders' Equity - Stock Options Outstanding (Detail)	3 Months Ended
	Apr. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Number Outstanding | shares	26,021,155
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	4 years 9 months 18 days
Weighted- Average Exercise Price, Options Outstanding	$ 56.22
Options Exercisable, Number of Shares | shares	10,372,672
Options Exercisable, Weighted- Average Exercise Price	$ 43.12
$0.86 to $37.95
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	0.86
Range of Exercise Prices, Maximum	$ 37.95
Options, Number Outstanding | shares	4,461,075
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	2 years 3 months 18 days
Weighted- Average Exercise Price, Options Outstanding	$ 27.45
Options Exercisable, Number of Shares | shares	3,691,607
Options Exercisable, Weighted- Average Exercise Price	$ 28.16
$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 | shares	2,480,093
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	2 years
Weighted- Average Exercise Price, Options Outstanding	$ 39.87
Options Exercisable, Number of Shares | shares	1,934,518
Options Exercisable, Weighted- Average Exercise Price	$ 39.57
$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 | shares	3,684,201
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	4 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 52.30
Options Exercisable, Number of Shares | shares	2,012,682
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 | shares	1,414,340
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	5 years 1 month 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 55.31
Options Exercisable, Number of Shares | shares	514,062
Options Exercisable, Weighted- Average Exercise Price	$ 55.35
$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 | shares	6,138,145
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	5 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 59.34
Options Exercisable, Number of Shares | shares	2,015,280
Options Exercisable, Weighted- Average Exercise Price	$ 59.34
$59.37 to $77.86
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	59.37
Range of Exercise Prices, Maximum	$ 77.86
Options, Number Outstanding | shares	2,326,108
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 2 months 12 days
Weighted- Average Exercise Price, Options Outstanding	$ 68.62
Options Exercisable, Number of Shares | shares	204,523
Options Exercisable, Weighted- Average Exercise Price	$ 65.72
$80.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	80.99
Range of Exercise Prices, Maximum	$ 80.99
Options, Number Outstanding | shares	5,517,193
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 80.99
Options Exercisable, Number of Shares | shares	0
Options Exercisable, Weighted- Average Exercise Price	$ 0.00

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Stockholders' Equity - Schedule of Restricted Stock Activity (Detail)	3 Months Ended
	Apr. 30, 2016 USD ($) $ / shares shares
Restricted Stock Outstanding
Ending Balance	20,409,577
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Restricted stock units and awards
Restricted Stock Outstanding
Beginning Balance	21,294,585
Granted, Outstanding	1,468,220
Cancelled, Outstanding	(512,280)
Vested and converted to shares, Outstanding	(1,840,948)
Ending Balance	20,409,577
Expected to vest, Outstanding	17,223,868
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Granted | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Cancelled | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Vested and converted to shares | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Restricted Stock Outstanding Aggregate Intrinsic Value
Aggregate Intrinsic Value, Ending Balance | $	$ 1,547,045,937
Aggregate Intrinsic Value, Expected to vest | $	$ 1,305,569,194

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Stockholders' Equity - Shares of Common Stock Available for Future Issuance under Stock Option Plans (Detail) - shares	Apr. 30, 2016	Jan. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (in shares)	26,021,155	26,258,798
Restricted stock awards and units outstanding (in shares)	20,409,577
Stock available for future grant (in shares)	45,044,696	46,879,908
Convertible senior notes (in shares)	17,308,880
Warrants (in shares)	17,308,880
Total shares available for future grant (in shares)	132,937,984
2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	44,462,309
2014 Inducement Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	446,533
Amended and Restated 2004 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	6,844,796
Acquired equity plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	135,854

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Income Tax Disclosure [Abstract]
Provision for income taxes	$ (1,604)	$ 13,981
Income (loss) before provision for income taxes	$ 37,155	$ 18,073
Effective tax rate	(4.00%)	77.00%
Income tax benefit recognized from stock compensation expense	$ 51,400	$ 43,700
Reasonably possible decrease of unrecognized tax benefits	$ 15,000

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Earnings Per Share - Reconciliation of Denominator Used in Calculation of Basic and Diluted Loss Per Share (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Earnings Per Share [Abstract]
Net income	$ 38,759	$ 4,092
Weighted-average shares outstanding for basic income per share (in shares)	677,514	653,809
Convertible senior notes (in shares)	945	0
Employee stock awards (in shares)	8,340	10,501
Warrants (in shares)	0	0
Adjusted weighted-average shares outstanding and assumed conversions for diluted income per share (in shares)	686,799	664,310

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Earnings Per Share - Shares Excluded from Diluted Earnings or Loss Per Share (Detail) - shares shares in Thousands	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Employee stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	21,321	8,801
Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	0	17,309
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	17,309	17,309

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Commitments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2016	Jan. 31, 2016
Other Commitments [Line Items]
Financing obligation - leased facility	$ 202,246	$ 196,711
Total operating lease commitment balance	$ 2,600,000
Purchase commitment term	4 years
Purchase commitment, 2017	$ 70,000
Purchase commitment, 2018	96,000
Purchase commitment, 2019	108,000
Purchase commitment, 2020	126,000
Other Current and Noncurrent Liabilities [Member]
Other Commitments [Line Items]
Financing obligation - leased facility	220,300
Letter of Credit
Other Commitments [Line Items]
Value of outstanding letters of credit	83,800
Facilities Space [Member]
Other Commitments [Line Items]
Total operating lease commitment balance	$ 2,300,000

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Commitments - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating and Capital Leases (Detail) $ in Thousands	Apr. 30, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Future minimum lease payments under non-cancelable capital leases, Remaining nine months of fiscal 2017	$ 50,960
Future minimum lease payments under non-cancelable capital leases, Fiscal 2018	122,765
Future minimum lease payments under non-cancelable capital leases, Fiscal 2019	115,797
Future minimum lease payments under non-cancelable capital leases, Fiscal 2020	201,579
Future minimum lease payments under non-cancelable capital leases, Fiscal 2021	37
Future minimum lease payments under non-cancelable capital leases, Thereafter	0
Future minimum lease payments under non-cancelable capital leases, Total	491,138
Less: amount representing interest	(42,438)
Present value of capital lease obligations	448,700
Future minimum lease payments under non-cancelable operating leases, Remaining nine months of fiscal 2017	287,083
Future minimum lease payments under non-cancelable operating leases, Fiscal 2018	351,971
Future minimum lease payments under non-cancelable operating leases, Fiscal 2019	299,254
Future minimum lease payments under non-cancelable operating leases, Fiscal 2020	239,804
Future minimum lease payments under non-cancelable operating leases, Fiscal 2021	223,280
Future minimum lease payments under non-cancelable operating leases, Thereafter	1,233,948
Future minimum lease payments under non-cancelable operating leases, Total	2,635,340
Financing Obligation, Building in Progress-Leased Facility, Remaining nine months of fiscal 2017	14,518
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2018	21,437
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2019	21,881
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2020	22,325
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2021	22,770
Financing Obligation, Building in Progress-Leased Facility, Thereafter	233,927
Financing Obligation, Building in Progress-Leased Facility	$ 336,858

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Related-Party Transactions (Details) - Affiliated Entity [Member] $ in Millions	3 Months Ended
	Apr. 30, 2016 USD ($) board_member board_seat employee
Related Party Transaction [Line Items]
Number of Company's Board Members that Hold Board Seats in Foundation	1
Number of Board Seats in Foundation	3
Number of Company's Employees that Hold Board Seats in Non-Profit | employee	1
Number Company's Board Members that Hold Board Seats in Non-Profit | board_member	1
Number of Board Seats in Non-Profit Held by Company's Employees and Board Members	3
Number of Board Seats in Non-Profit	9
Value of resources donated to related parties | $	$ 0.8
Value of donated subscriptions to related parties | $	$ 27.8