Salesforce.com

2020
ANNUAL
REPORT

As FY20 comes to a close, we’d like to 
extend our gratitude to our employees,
customers, Trailblazers, partners, and 
all of their families. We’re continually 
reminded, at times like these, that we 
are all connected, and we’re grateful
for each and every one of you.

At Salesforce, we’re doing everything
we can to help the world emerge 
strong from this crisis. By working 
together, we’ll find a way through this. 
We look forward to continuing to do 
business with you all, and wish you 
the best in the new fiscal year.

FY20
HIGHLIGHTS

$17.1 billion 

 FY20 Revenue, up 29% year over year

49,000+ 

Employees

$30.8 billion 

 Remaining Performance Obligation,* up 20% year over year 

90% 

of the Fortune 500 are Salesforce customers

$4.3 billion 

 Full Year Operating Cash Flow, up 27% year over year

4.9 million+ 

Hours contributed to the community since inception

*  “Remaining Performance Obligation” represents future revenues 

that are under contract but have not yet been recognized.

Fellow shareholders,

As the world continues to deal with the unprecedented effects of the 
coronavirus, we hope you and your families are staying healthy and safe.
This virus impacts everyone, reminding us that we are all truly connected
and that we have obligations to each other. 

At Salesforce, meeting our responsibilities to all our stakeholders has been 
an essential part of our culture since our founding 21 years ago. Today, we’re
unleashing the full power of our company to help our stakeholders navigate 
this pandemic, showing once again that business can be the greatest force
for change.

Our first priority continues to be the health and safety of our employees
and their families. Since early March, our nearly 50,000 global employees 
have been working productively from home. We also made a global 
commitment to not conduct significant layoffs for 90 days and to continue
to pay our onsite service providers during this time of economic upheaval. 
Every week, our Executive Leadership team hosts a call with our entire 
global workforce to hear their concerns and take employee questions to 
ensure that we are all moving forward together. 

With social distancing and cessation of travel, we are reimagining our 
in-person events and turning them into digital experiences. Rather than 
thousands of customers gathering in person, we are connecting with
millions virtually. We launched Leading Through Change, a new broadcast 
series featuring industry luminaries that addresses key issues leaders are
confronting in this pandemic. So far, we’ve hosted incredible leaders like
BT Chief Executive Philip Jansen and Chef José Andrés.

At the same time, we’re partnering closely with local communities. We're
working tirelessly to help deliver personal protective equipment (PPE) to 
those most in need. To date, we’ve sourced 50 million units of PPE for
doctors, nurses, and first responders on the front lines in the U.S., France, 
and India.

We’ve given more than $10 million in grants to local and global organizations
on the forefront of the response, including organizations such as the CDC
Foundation, UCSF’s COVID-19 Response Fund, the Italian Red Cross, the
Madrid Food Bank, the French Red Cross, and the New York COVID-19
Emergency Fund. As always, we’re matching employee donations to eligible
organizations, and our employees are volunteering their time to support
their local communities. In addition, Salesforce Care Small Business Grants 
will provide $10,000 in capital to help keep businesses afloat as they work to
replenish materials, pay salaries, or adapt their business model to overcome 
these challenging times. 

Even as we help respond to the urgent needs of this crisis, we’re delivering new
solutions to help our customers succeed. Social distancing and cessation of travel
have forced companies to accelerate their digital transformations, and Salesforce is 
helping them sell, service, market, conduct commerce, and collaborate from home. 
Thousands of customers have deployed our Salesforce Care rapid response solutions 
to help them stay connected to their employees, customers, and partners during these
uncertain times. Organizations around the world have been able to quickly and easily
deploy these solutions, which we made available free for 90 days. With Salesforce Care 
for Employee and Customer Support, organizations can quickly create an AI-powered
employee help center, customer service, and contact center application. Thousands of 
small businesses have signed up for Salesforce Care for Small Business, which includes 
Essentials and Tableau Desktop.

We are supporting those on the front lines with our Salesforce Care for Health solution 
that provides free access to technology for emergency response and healthcare 
management teams.  In just four days, Women's College Hospital in Toronto, Canada 
built an online COVID-19 self-assessment on Salesforce that is integrated with its
hospital information system..

We’re also helping governments and NGOs respond to the pandemic. In France, the 
government launched a website and hotline built on Service Cloud to help citizens find
essential needs and resources while quarantined. And Tableau is offering an amazing 
free dashboard–the Tableau Data Hub — that’s tracking the virus, based on data from
the World Health Organization and other organizations, and which already has more
than 700,000 users and more than 1 million views.

Our customers are depending on our technology to manage through the crisis. With
Salesforce Virtual Personal Shopper, for example, retailers are providing their customers
with 1-to-1 shopping experiences, even as their brick-and-mortar stores remain closed. 
Thousands of companies have been able to meet the increased volume of customer 
service inquiries with Einstein Bots, which can carry out automated conversations to 
handle common questions and hand off to a human agent if required.

At the same time, we are already beginning to plan for the next phase of this challenge—
the recovery. We have to ensure that our employees can come back to work at our offices
safely, and we have a comprehensive plan so that we’re ready to hit the ground running. 
We’ll also work together with our customers, partners, and communities as they recover
and plan for what will be a new normal in the post-pandemic future. For example, we're
helping workers reskill with our Trailhead learning platform because some jobs will 
change and new kinds of skills will be needed as we adjust to a new normal when we 
come out of this crisis.

The current pandemic has shown that digital is the lifeline for every business. In
fact, the pandemic is accelerating the movement to the cloud, automation and a 
customer-centric mindset. As the leader in CRM, customers are looking to us for
guidance and solutions in these uncharted and rapidly changing waters. In order to
help our customers gain greater clarity and aid decision making, Salesforce has been 
synthesizing insights from multiple places including customer roundtables, research
and work with partners. The resulting playbook includes short and medium term
scenarios as well as quite detailed recommendations. You can access this playbook at
salesforce.com/covid-19-response-playbook. As customers emerge from the crisis, they
know they have to double down on digital and go faster to survive now and succeed in
the post-COVID-19 future. The new normal will require companies to adopt new ways of 
conducting sales and service, marketing and commerce, and new ways of collaborating
and reskilling workers. Every company will be motivated to digitally transform, and we’ll
be there for them as we recover from this global crisis and return to growth.

While we will be dealing with this pandemic and its effects on the global economy and 
our business over many months, this crisis has underscored the imperative of digital
transformation that only Salesforce can provide with our Customer 360. We can reflect 
back on fiscal year 2020 as an indicator of how we are primed and well-positioned for 
when the economy comes back to life. In fiscal year 2020, annual revenue grew 29%,
surpassing $17 billion, and operating cash flow grew 27% to $4.3 billion. No other 
enterprise software company at our scale has grown at this rate. In addition, our $20 
million-plus relationships grew 34% over last year.

Finally, I’m enormously proud that even as we’ve delivered strong returns for our 
shareholders over the years, we continue to give back and deliver great returns for all 
our stakeholders. Over the past 21 years, we’ve given $330 million in grants to worthy 
causes, our employees globally have volunteered 5 million hours, and 46,000 nonprofit
and higher education organizations use our software for free. We've supported efforts 
to improve public education, eliminate homelessness in our cities, advance the health
of our planet, and now fight this virus.

Going forward, we’ll continue to do everything we can to help our investors, customers,
partners, employees, and communities emerge strong from this crisis. As always, I’m
grateful to you for being our partner. And as I look to the future, I know that by truly
coming together we will all get to a safe and healthy new normal.

Thank you,
Marc Benioff 
Chair and CEO
Salesforce

DOING WELL 
& DOING GOOD

By sticking to our values, we managed 
to make FY20 another great year. 
A big thank you to everyone who 
made these accolades possible.

LEADER IN 
PHILANTHROPY

“CHANGE THE
WORLD” LIST

LEADER IN 
CULTURE

#1 TOP 50
COMPANIES 
THAT CARE

LEADER IN 
INNOVATION

WORLD’S MOST
INNOVATIVE
COMPANIES

MOST
SUSTAINABLE
COMPANIES

WORLD’S
BEST WORKPLACE

FUTURE 5O
TOP 10

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
È Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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

For the fiscal year ended January 31, 2020
OR

Commission File Number: 001-32224

salesforce.com, inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

94-3320693
(IRS Employer
Identification No.)

Salesforce Tower
415 Mission Street, 3rd Fl
San Francisco, California 94105
(Address of principal executive offices)
Telephone Number (415) 901-7000
(Registrant’s telephone number, including area code)

Title of each class

Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per
share

CRM

New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:
Not applicable

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes È No ‘

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Act. Yes ‘ No È
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 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 È No ‘

Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted
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 such files). Yes È 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 È
Non-accelerated filer ‘

‘
Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
Based on the closing price of the Registrant’s Common Stock on the last business day of the Registrant’s most recently completed
second fiscal quarter, which was July 31, 2019, the aggregate market value of its shares (based on a closing price of $154.50 per share) held
by non-affiliates was approximately $92.7 billion. Shares of the Registrant’s Common Stock held by each executive officer and director and
by each entity or person that owned 5 percent or more of the Registrant’s outstanding Common Stock were excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 29, 2020, there were approximately 895 million shares of the Registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for its 2020 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed
within 120 days of the Registrant’s fiscal year ended January 31, 2020, are incorporated by reference in Part III of this Report on Form 10-K.
Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as
part of this Form 10-K.

INDEX

PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4A. Executive Officers of the Registrant

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation . . .
Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Consolidated Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

Page No.

4
10
32
33
33
33
34

36
37
39
58
62
118
118
119

120
120

120
120
120

121
122
123
127

2

FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934,
as amended (“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:
our service performance and security, including the resources and costs required to avoid unanticipated
downtime and prevent, detect and remediate potential security breaches; the expenses associated with our data
centers and third-party infrastructure providers; additional data center capacity; our reliance on third-party
hardware, software and platform providers; the effect of evolving domestic and foreign government regulations,
including those related to the provision of services on the Internet, those related to accessing the Internet, and
those addressing data privacy, cross-border data transfers and import and export controls; new services and
product features, including any efforts to expand our services beyond the CRM market; our strategy of acquiring
or making investments in complementary businesses, joint ventures, services, technologies and intellectual
property rights; our ability to realize the benefits from strategic partnerships, joint ventures and investments; our
ability to successfully integrate acquired businesses and technologies; the competitive nature of the market in
which we participate; 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 ability to execute our business
plans; our ability to continue to grow unearned revenue and remaining performance obligation; the pace of
change and innovation in enterprise cloud computing services; the seasonal nature of our sales cycles; our
attrition; our international expansion strategy; the demands on our personnel and infrastructure resulting from
significant growth in our customer base and operations, including as a result of acquisitions; our dependency on
the development and maintenance of the infrastructure of the Internet; real estate and office facilities space; our
operating results and cash flows; the performance and fair value of our investments in complementary businesses
through our strategic investment portfolio; the impact of future gains or losses from our strategic investment
portfolio including gains or losses from overall market conditions that may affect the publicly traded companies
within our strategic investment portfolio; our ability to protect our intellectual property rights; our ability to
develop our brands; the impact of foreign currency exchange rate and interest rate fluctuations on our results;
the valuation of our deferred tax assets and the release of related valuation allowances; the potential availability
of additional tax assets in the future; the impact of new accounting pronouncements and tax laws; uncertainties
affecting our ability to estimate our tax rate; uncertainties regarding our tax obligations in connection with
potential jurisdictional transfers of intellectual property, including the tax rate, the timing of the transfer and the
value of such transferred intellectual property; the effect of general economic and market conditions; the impact
of geopolitical events; the impact of expensing stock options and other equity awards; the sufficiency of our
capital resources; factors related to our 2023 and 2028 senior notes, revolving credit facility and loan
associated with 50 Fremont; compliance with our debt covenants and lease obligations; current and potential
litigation involving us; and the impact of climate change, natural disasters and actual or threatened public
health emergencies. 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.

3

ITEM 1. BUSINESS

Overview

PART I.

Salesforce is a global leader in customer relationship management (“CRM”) technology that brings

companies and customers together. Founded in 1999, Salesforce enables companies of every size and industry to
connect with their customers in new ways through existing and emerging technologies, including cloud, mobile,
social, blockchain, voice and artificial intelligence (“AI”), to transform their businesses.

Salesforce’s Customer 360 is an integrated platform that unites sales, service, marketing, commerce,
integration, analytics and more to give companies a single source of truth about their customers. Our service
offerings are designed to be intuitive and easy to use. They can generally be deployed quickly, configured easily
and integrated with other platforms and enterprise applications. We sell to businesses worldwide primarily on a
subscription basis, through our direct sales efforts and also indirectly through partners. Through our platform and
other developer tools, we also enable third parties to develop additional functionality and new applications, or
apps that run on our platform, which are sold separately from—or in conjunction with—our service offerings. To
advance the development of the Customer 360 platform, we have been acquisitive. For example, in fiscal year
2019, we acquired MuleSoft, Inc. (“MuleSoft”), an integration platform company, and in fiscal year 2020, we
acquired Tableau Software Inc. (“Tableau”), an analytics company.

Salesforce is committed to a core set of values: trust, customer success, innovation and equality. Foremost

among these is trust, which is the foundation for everything we do. Our customers trust our technology to deliver
the highest levels of security, privacy, performance and availability at scale. Customer success is at the core of
our business, with people, programs and a focus on making every customer successful. We believe our
continuous innovation drives customer success and builds trust, which in turn drives mutual growth. Finally, we
value the equality of every individual at our company and in our community as we believe that equality,
sustainability and diversity make us a better company. Our culture is driven by these four core values which in
turn fosters dialogue, collaboration, recognition and a sense of family.

We believe the business of business is to make the world a better place for all of our stakeholders, including

stockholders, customers, employees, partners, the planet and the communities in which we work and live.
Salesforce is committed to transparent environmental, social and governance disclosures and maintaining
programs that support the success of these initiatives.

We were incorporated in Delaware in February 1999. Our principal executive offices are located in San

Francisco, California. Our principal address is Salesforce Tower, 415 Mission St, 3rd Floor, San Francisco,
California 94105, and our primary website address is www.salesforce.com.

Our Service Offerings

Salesforce Customer 360 includes applications and platform services for every touchpoint in a customer’s

journey. It includes the following offerings:

Sales Cloud. Sales Cloud empowers sales teams of companies of every size and industry to sell faster,
smarter and in the way they want. Our customers use Sales Cloud to store data, monitor leads and
progress, forecast opportunities, gain insights through analytics and relationship intelligence, and deliver
quotes, contracts and invoices.

Service Cloud. Service Cloud enables companies to deliver smarter, faster and more personalized
customer service and support. Our customers use Service Cloud to connect their service agents with
customers anytime and anywhere, on popular devices and across multiple channels: phone, email,
messaging, chat, live video, SMS, self-service web portals, social networks, online communities and

4

directly within their own products and mobile apps. In addition, Service Cloud offers a field service
solution that enables companies to connect agents, dispatchers and mobile employees through one
centralized platform, on which they can schedule and dispatch work intelligently, and track and manage
jobs in real-time.

Marketing and Commerce Cloud. Marketing Cloud enables companies to plan, personalize and
optimize one-to-one customer marketing journeys, including interactions across email, mobile, social,
web and connected products. In addition, companies can segment and target audiences to power precise
digital marketing at scale. With Marketing Cloud, customer data can also be integrated with Sales Cloud
and Service Cloud in the form of leads, contacts and customer service cases to give companies a complete
view of their customers. Our Commerce Cloud empowers brands to unify the customer experience across
all points of commerce, including mobile, web, social and store. With embedded AI that delivers a
personalized shopping experience and a robust partner ecosystem, Commerce Cloud helps companies
drive increased engagement, conversion, revenue and loyalty from their customers.

Salesforce Platform and Other.

Customer 360 Platform. The Customer 360 Platform empowers Information Technology (“IT”),
developers and business users with no-code to pro-code Platform-as-a-Service tools for building,
securing, integrating and managing the business apps that power today’s customer experiences. With the
Customer 360 Platform, enterprises drive digital transformation at scale by building applications for any
business need. The Customer 360 Platform also includes Trailhead, our free online learning platform that
allows anyone to learn in-demand Salesforce skills, including administering our services and developing
on the Salesforce Customer 360 Platform. With myTrailhead, customers can personalize Trailhead for
their business to empower learning and enablement at their company. The Customer 360 Platform also
includes our Heroku Engagement Platform, which enables developers to build, run and operate
applications entirely in the cloud.

Integration. MuleSoft Anypoint Platform enables our customers to connect any system, application, data
or device, whether in the cloud or on-premises, on a unified platform using application networks instead
of inflexible custom code. By unlocking data across their enterprise, our customers can create new
revenue opportunities, increase operational efficiency and create differentiated customer experiences.

Analytics. Tableau and Einstein Analytics offer customers intelligent analytics capabilities so they can
better understand their business data. By providing self-service analytical technology to customers, they
are intended to improve our customers’ decision-making and allow customers to take action from any
device.

Productivity. Quip Collaboration Platform combines documents, spreadsheets, apps and chat with live
CRM data to deliver a central hub for teams to create, collaborate and get work done from almost any
device.

Our service offerings are suited to meet the needs of our customers in certain industries, such as solutions

for financial services, healthcare and life sciences, manufacturing, consumer goods, government and
philanthropy, as well as customers of every size with offerings such as Essentials for small business.
Additionally, our Community Cloud enables companies to quickly create and manage trusted, branded digital
destinations for customers, partners and employees, collectively referred to as community cloud. This allows
companies to engage and collaborate directly with groups of people by giving them access to relevant
information, apps and experts.

Business Benefits of Using Our Solution

The key advantages of our solutions include the following:

• A multi-tenant application architecture designed to enable our service offerings to scale securely,

reliably and cost effectively.

5

• Rapid deployment and lower total cost of ownership with multiple releases per year deployed

automatically with new features and functionality.

• Ease of integration and configuration with application programming interfaces that enable customers to
integrate our solutions with existing third-party, custom and legacy apps, as well as write their own
application services that integrate with our solutions.

•

Solutions designed to be intuitive, easy to use with minimal training and accessible across multiple
hardware platforms such as the phone.

• Rapid development of apps without having to invest in hardware by providing infrastructure and

development environments on demand.

• Continuous innovation through our Ideas Exchange, which is a forum to provide feedback and suggest

new features for future service releases.

•

Positive environmental impact with our multi-tenant cloud computing model that has a smaller
environmental footprint than traditional hardware and software.

Our Business and Growth Strategy

We orient our business strategy and invest for future growth by focusing on the following key priorities:

Expanding relationships with existing customers. We see significant opportunities to deepen existing
customer relationships through cross selling and upselling. For example, we see significant opportunity to
expand multi-offering adoption with our existing customers, including our largest enterprise customers.
As our customers realize the benefits of our service offerings, we aim to upgrade the customer experience
with new products, premium editions and additional subscriptions by targeting new functional areas and
business units, and expanding all editions of our service offerings with new features, functions and
increased security through our own development, acquisitions and partnerships. Ultimately, our goal is to
become our customers’ digital trusted advisors, inspiring enterprise-wide digital transformation and
accelerating strategic engagements through direct discussions with the highest levels of our customers’
executive management.

International expansion. We continue to increase our investment in our international go-to-market
resources, operations and infrastructure to deliver the highest quality service to our customers around the
world.

Extending go-to-market capabilities. We believe that our offerings provide significant value for
businesses of any size. We will continue to pursue businesses of all sizes in major regions globally,
primarily through our direct sales force and have steadily increased and plan to continue to increase the
number of direct sales professionals we employ. We will also continue to develop indirect distribution
channels for our solutions around the globe and new go-to-market strategies such as self-service for
Essentials.

Targeting vertical industries. To better meet the needs of our customers, we provide solutions
specifically built for customers in certain industries, such as financial services, healthcare and life
sciences, government, manufacturing, consumer goods and philanthropy. These solutions help to expand
our potential customer base and help to attract new customers.

Expanding into new categories. As part of our growth strategy we are delivering innovative solutions in
new categories, including analytics, e-commerce, Internet of Things (“IoT”) and integration, and expect
to continue this type of category expansion in the future.

Expanding and strengthening our partner ecosystem. The Customer 360 Platform enables customers,
independent software vendors (“ISVs”) and third-party developers to create, test and deliver cloud-based
apps. These apps can be marketed and sold on the AppExchange, our enterprise cloud marketplace, or

6

sold directly by software vendors. We continue to work with and invest in our partner ecosystem,
including these ISVs and system integrators (“SIs”), to accelerate our reach into new markets and
industries, offer a variety of solutions natively and through the AppExchange, and address the business
requirements of both current and future customers.

Promoting strong customer adoption and reducing customer attrition. We believe that we have the
people, processes and proven innovation to help companies transform successfully. We have free, curated
resources such as Trailhead to help companies of every size learn our systems, as well as customer
success programs including success management resources, advisory services, technical architects and
business strategists to enable and accelerate digital transformation. With these resources and our customer
success programs, we strive to reduce attrition and secure renewals of existing customer subscriptions
prior to the end of their contractual terms.

Mergers and Acquisitions and Strategic Investments

From time to time, we evaluate opportunities to acquire or invest in complementary businesses, services,
technologies and intellectual property rights to complement our organic innovation and advance the development
of our Customer 360 Platform. These evaluations resulted in our acquisition of several companies in fiscal 2020,
notably Salesforce.org, Tableau and ClickSoftware Technologies, Ltd. (“ClickSoftware”), which expanded our
solutions built for non-profit and higher education organizations, as well as our analytics and field service
management capabilities, respectively.

In addition to mergers and acquisitions, we invest in early- to late-stage technology and professional cloud

service companies across the globe to support our business initiatives. We plan to continue making these types of
strategic investments as opportunities arise.

Technology, Development and Operations

We primarily deliver our Salesforce solutions as highly scalable, cloud computing application and platform

services on a multi-tenant technology architecture. We also offer integration and analytics capabilities in the
cloud, as well as on-premises, to provide our customers more options to integrate and understand their data.
Multi-tenancy is an architectural approach that allows us to operate a single application instance for multiple
organizations, treating all customers as separate tenants who run in virtual isolation from each other. This
approach allows us to spread the cost of delivering our services across our user base and scale our business faster
than traditional software vendors while focusing our resources on building new functionality and enhancing
existing offerings.

We provide the majority of our services to our customers from infrastructure designed and operated by us
but secured within third-party data center facilities. In combination with these third-party data center facilities,
we also run our services on cloud computing platform partners who offer Infrastructure-as-a-Service, including
servers, storage, databases and networking. Our technology and product efforts are focused on improving and
enhancing the features, functionality, performance, availability and security of our existing service offerings, as
well as developing new features, functionality and services and integrating businesses, services and technologies
from acquisitions. Performance, functional depth, security, usability and sustainability of our solutions influence
our technology decisions and product direction.

Competition

The market for our service offerings is highly competitive, rapidly evolving and fragmented, and subject to

changing technology and low barriers to entry, shifting customer needs and frequent introductions of new
products and services.

7

Our current competitors include:

• Vendors of packaged business software, as well as companies offering enterprise apps delivered

through on-premises offerings from enterprise software application vendors and cloud computing
application service providers, either individually or with others;

•

•

•

•

Internally developed enterprise applications (by our potential customers’ IT departments);

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

Suppliers of traditional business intelligence and data preparation products, as well as business
analytics software companies;

Integration software vendors and other companies offering integration or API solutions;

• Marketing vendors, which may be specialized in advertising, targeting, messaging, or campaign

automation;

• E-commerce solutions from established and emerging cloud-only vendors and established on-premises

vendors;

• Traditional platform development environment companies and cloud computing development platform
companies who may develop toolsets and products that allow customers to build new apps that run on
the customers’ current infrastructure or as hosted services;

•

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

• AI solutions from new startups and established companies.

We believe more traditional enterprise software application and platform vendors may become a greater

competitive threat as they shift more of their focus to cloud computing.

Customers

We sell to businesses of all sizes and in almost every industry worldwide. 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 in fiscal 2020, 2019 or 2018.

Customer Service and Support

We offer professional services to help customers achieve business results faster with Salesforce solutions.
Our architects and innovation program teams act as advisors to plan and execute digital transformations for our
customers. This includes implementation services for multi-cloud and complex implementations. We provide
best-practices and AI-based recommendations and adoption programs globally. In addition, we provide advanced
education, including instructor-led and online courses to certify our customers and partners on architecting,
administering, deploying and developing our service offerings.

Our global customer support group responds to both business and technical inquiries about the use of our

products via the web, telephone, email, social networks and other channels. We provide standard customer
support during regular business hours at no charge to customers who purchase any of our paying subscription
editions. We also offer premier customer support that is either included in a premium success offering or sold for
an additional fee, which can include services such as priority access to technical resources, developer support and
system administration. In addition, we offer a premier priority support add-on that is designed to provide
customers technical account management with responses for incidents from a dedicated team knowledgeable
about the customer’s specific enterprise architecture, which offers proactive monitoring and instruction to
optimize their usage of our products.

8

Sales and Marketing

We sell our services primarily through our direct sales force, which is comprised of telephone sales

personnel based in regional hubs, and field sales personnel based in territories close to their customers. Both our
telephone sales and field sales personnel are supported by sales representatives, who are primarily responsible for
generating qualified sales leads.

To a lesser extent, we also have a network of partners who refer sales leads to us and who then assist in
selling to these prospects. This network includes global consulting firms, systems integrators and other partners.
In return, we typically pay these partners a fee based on the first-year subscription revenue generated by the
customers whom they refer. We continue to invest in developing additional distribution channels for our
subscription service.

Our marketing strategy is to promote our brand and generate demand for our offerings. We use a variety of

marketing programs across traditional and social channels to target our prospective and current customers,
partners and developers. We focus our marketing activities on the cities and countries with the largest market
opportunity.

Our primary marketing activities include:

• Multi-channel marketing campaigns that span email, social, web and more, which align to a broader

customer journey;

• Customer events of all sizes to create customer and prospect awareness, including proprietary events
such as Dreamforce and World Tours, as well as participation in trade shows and industry events;

•

•

Press and industry analyst relations to garner third-party validation and generate positive coverage for
our company, brand, service offerings and value proposition;

Partner co-marketing activities with global and regional implementation partners;

• Customer testimonials and our community of Trailblazers, individuals who drive innovation, grow

their careers and transform their businesses using the Salesforce platform;

• Event sponsorships; and

•

Primary real estate signage.

Intellectual Property

We rely on a combination of trademarks, copyrights, trade secrets and patents, as well as contractual

provisions, to protect our proprietary technology and our brands. We also enter into confidentiality and
proprietary rights agreements with our employees, consultants and other third parties and control access to
software, services, documentation and other proprietary information. We believe the duration of our patents is
adequate relative to the expected lives of our service offerings. We also purchase or license technology that we
incorporate into our products or services. At times, we make select intellectual property broadly available at no
or low cost to achieve a strategic objective, such as promoting industry standards, advancing interoperability,
fostering open source software or attracting and enabling our external development community. While it may be
necessary in the future to seek or renew licenses relating to various aspects of our products and business
methods, we believe, based upon past experience and industry practice, such licenses generally could be obtained
on commercially reasonable terms.

Employees

As of January 31, 2020, we had more than 49,000 employees. None of our employees in the United States

are represented by a labor union. However, for certain foreign subsidiaries, works councils represent our
employees.

9

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
other filings with the Securities and Exchange Commission (“SEC”), and all amendments to these filings, can be
obtained free of charge from our website at http://investor.salesforce.com/about-us/investor/financials/ or by
contacting our Investor Relations department at our office address listed above following our filing of any of
these reports with the SEC. The SEC maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The
contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs
for these websites are intended to be inactive textual references only.

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, stockholders’
equity, 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, or the underlying infrastructure of the Internet are
breached, and unauthorized access is obtained to a customer’s data, our data or our IT systems, or authorized
access is blocked or disabled, our services may be perceived as not being secure, customers may curtail or stop
using our services, and we may incur significant reputational harm, legal exposure and liabilities, or a
negative financial impact.

Our services involve the storage and transmission of our customers’ and our customers’ customers’
proprietary and other sensitive data, including financial information and personally identifiable information.
While we have security measures in place to protect our customers and our customers’ customers’ data, our
services and underlying infrastructure may in the future be materially breached or compromised as a result of the
following:

•

•

•

•

•

•

•

•

third-party attempts to fraudulently induce employees or customers into disclosing sensitive
information such as user names, passwords or other information to gain access to our customers’ data,
our data or our IT systems;

efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored
organizations or nation-states;

cyber-attacks on our internally built infrastructure on which many of our service offerings operate;

vulnerabilities resulting from enhancements and updates to our existing service offerings;

vulnerabilities in the products or components across the broad ecosystem that our services operate in
conjunction with and are dependent on;

vulnerabilities existing within new technologies and infrastructures, including those from newly
acquired companies;

attacks on, or vulnerabilities in, the many different underlying networks and services that power the
Internet that our products depend on, most of which are not under our control or the control of our
vendors, partners, or customers; and

employee or contractor errors or intentional acts that compromise our security systems.

These risks are mitigated, to the extent possible, by our ability to maintain and improve business and data

governance policies, enhanced processes and internal security controls, including our ability to escalate and

10

respond to known and potential risks. Our Board of Directors, Audit Committee and executive management are
regularly briefed on our cyber-security policies and practices and ongoing efforts to improve security, as well as
periodic updates on cyber-security events. Although we have developed systems and processes designed to
protect our customers’ and our customers’ customers’ proprietary and other sensitive data, we can provide no
assurances that such measures will provide absolute security. For example, our ability to mitigate these risks may
be impacted by the following:

•

•

•

•

frequent changes to, and growth in complexity of, the techniques used to breach, obtain unauthorized
access to, or sabotage IT systems and infrastructure, which are generally not recognized until launched
against a target, possibly resulting in our being unable to anticipate or implement adequate measures to
prevent such techniques;

the continued evolution of our internal IT systems as we early adopt new technologies and new ways of
sharing data and communicating internally and with partners and customers, which increases the
complexity of our IT systems;

authorization by our customers to third-party technology providers to access their customer data, which
may lead to our customers’ inability to protect their data that is stored on our servers; and

our limited control over our customers or third-party technology providers, or the processing of data by
third-party technology providers, which may not allow us to maintain the integrity or security of such
transmissions or processing.

In the normal course of business, we are and have been the target of malicious cyber-attack attempts and

have experienced other security incidents. To date, such identified security events have not been material or
significant to us, including to our reputation or business operations, or had a material financial impact, but there
can be no assurance that future cyberattacks will not be material or significant.

A security breach or incident could result in unauthorized parties obtaining access to, or the denial of
authorized access to, our IT systems or data, or our customers’ systems or data, including intellectual property
and proprietary, sensitive, or other confidential information. A security breach could also 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 increases in insurance premiums and legal and financial exposure and liability. Finally, the
detection, prevention and remediation of known or potential security vulnerabilities, including those arising from
third-party hardware or software, may result in additional financial burdens due to additional direct and indirect
costs, such as additional infrastructure capacity spending to mitigate any system degradation and the reallocation
of resources from development activities.

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, proprietary software 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.
Such defects could also create vulnerabilities that could inadvertently permit access to protected customer data.
For example, in fiscal 2020, we experienced a significant service disruption due to an internally deployed
software update that had an unintended impact on our services for certain customers. As a precaution, we
immediately disabled access to our services for potentially impacted customers while we worked to remediate the
issue. Upon completion of the evaluation of the cause and impact of the disruption, we determined it did not
materially affect our business, reputation or financial results.

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

11

difficulty in incorporating the acquired technologies into our services and in augmenting the technologies to meet
the quality standards that are consistent with our brand and reputation. As a result, our services may have errors
or defects resulting from the complexities of integrating acquisitions.

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 allowance for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and
risk of litigation.

Any interruptions or delays in services from third-parties, including data center hosting facilities, cloud
computing platform providers and other hardware and software vendors, or from our inability to adequately
plan for and manage service interruptions or infrastructure capacity requirements, 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. We also 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, hardware and data from a variety of vendors. Any
disruption or damage to, or failure of our systems generally, including the systems of our third-party platform
providers, 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. In addition, the ongoing Coronavirus epidemic could
potentially disrupt the supply chain of hardware needed to maintain these third-party systems or to run our
business. As we increase our reliance on these third-party systems, our exposure to damage from service
interruptions may increase. Interruptions in our services may cause us to issue credits or pay penalties, cause
customers to make warranty or other claims against us or 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.

For many of our offerings, our production environment and customers’ data are replicated in near real-time
in a separate facility located elsewhere. Certain offerings, including some offerings of companies added through
acquisitions, may be served through alternate facilities or arrangements. 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, such as
disaster recovery and business continuity arrangements, 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.

These hardware, software, data 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.

If we do not accurately plan for our infrastructure capacity requirements and we experience significant
strains on our data center capacity, our customers could experience performance degradation or service outages
that may subject us to financial liabilities, result in customer losses and harm our business. As we add data
centers and capacity and continue to move to cloud computing platform providers, 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.

12

Privacy concerns and laws such as the California Consumer Privacy Act and the European Union’s
General Data Protection Regulation, 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 over the Internet is evolving, as federal, state and foreign

governments continue to adopt new, or modify existing, laws and regulations addressing data privacy,
cybersecurity, data protection, data sovereignty and the collection, processing, storage, transfer and use of data,
generally. In some cases, data privacy laws and regulations, such as the European Union’s (“EU”) General Data
Protection Regulation (“GDPR”) that took effect in May 2018, impose obligations directly on Salesforce as both
a data controller and a data processor, as well as on many of our customers. In addition, new domestic data
privacy laws, such as the California Consumer Privacy Act (“CCPA”), which took effect in January 2020,
similarly impose new obligations on us and many of our customers, potentially as both businesses and service
providers. As the CCPA continues to evolve and various states introduce similar proposals, we and our customers
could be exposed to additional regulatory burdens. Further, laws and legislative proposals such as the EU’s
proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes,
and the tracking of individuals’ online activities.

Although we monitor the regulatory environment and have invested in addressing these developments, such

as GDPR and CCPA readiness, these laws may require us to make additional changes to our practices and
services to enable us or our customers to meet the new legal requirements, and may also increase our potential
liability exposure through new or higher potential penalties for non-compliance, including as a result of data
breaches. These new or proposed laws and regulations are subject to differing interpretations and may be
inconsistent among jurisdictions. These and other requirements could reduce demand for our services, require us
to take on more onerous obligations in our contracts, restrict our ability to store, transfer and process data or, in
some cases, impact our ability or our customers’ ability to offer our services in certain locations, to deploy our
solutions, to reach current and prospective customers, or to derive insights from customer data globally. For
example, ongoing legal challenges in Europe to the mechanisms allowing companies to transfer personal data
from the European Economic Area to the United States could result in further limitations on the ability to transfer
data across borders, particularly if governments are unable or unwilling to reach new or maintain existing
agreements that support cross-border data transfers, such as the EU-U.S. and Swiss-U.S. Privacy Shield
framework. Additionally, certain countries have passed or are considering passing laws requiring local data
residency. By way of further example, statutory damages available through a private right of action for certain
data breaches under CCPA, and potentially other states’ laws, may increase our and our customers’ potential
liability and the demands our customers place on us. The costs of compliance with, and other burdens imposed
by, privacy laws, regulations and standards may limit the use and adoption of our services, reduce overall
demand for our services, make it more difficult to meet expectations from or commitments to customers and our
customers’ customers, lead to significant fines, penalties or liabilities for noncompliance, impact our reputation,
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 our ability to provide our services
globally. Our customers expect us to meet voluntary certification and 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, the uncertain and shifting regulatory environment and trust climate may cause concerns
regarding data privacy and may cause our customers or our customers’ customers to resist providing the data
necessary to allow our customers to use our services effectively. Even the perception that the privacy and
security of personal information are not satisfactorily protected or do not meet regulatory requirements could
inhibit sales of our products or services and could limit adoption of our cloud-based solutions.

13

Our efforts to expand our services beyond the CRM market and to develop and integrate 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 a significant portion of our revenue from subscriptions to our CRM enterprise cloud computing

application services, and we expect this will continue for the foreseeable future. Our efforts to expand our
services beyond the CRM market, such as with Analytics and Integration, may not succeed and may reduce our
revenue growth rate. In addition, the markets for certain of our offerings, including Einstein Analytics and Voice,
blockchain, and other offerings, remain relatively new and it is uncertain whether our efforts, and related
investments, will ever result in significant revenue for us. In addition, we may be required to continuously
enhance our artificial intelligence offerings so that quality recommendations can be provided to our customers.
Further, the introduction of significant platform changes and upgrades may not succeed and early stage interest
and adoption of such new services may not result in long term success or significant revenue for us.

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.

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 could 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 by customers, administrators and developers, as well as our
ability to seamlessly integrate all of our service offerings and develop adequate selling capabilities in new
markets. Failure in this regard may significantly impair our revenue growth as well as negatively impact our
operating results if the additional costs are not offset by additional revenues. In addition, because our services are
designed to operate over various network technologies and on a variety of mobile devices, operating systems and
computer 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,
app development platform and database technologies, as well as continue to maintain and support our services on
legacy systems. 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.

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 other transactions, arrangements, and investments involve numerous risks and could create

unforeseen operating difficulties and expenditures, including:

•

•

•

potential failure to achieve the expected benefits on a timely basis or at all;

potential identified or unknown security vulnerabilities in acquired products that expose us to
additional security risks or delay our ability to integrate the product into our service offerings or
recognize the benefits of our investment;

difficulties in increasing or maintaining the security standards for acquired technology consistent with
our other services, and related costs;

14

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

difficulty of transitioning the acquired technology onto our existing platforms and customer acceptance
of multiple platforms on a temporary or permanent basis;

augmenting the acquired technologies and platforms to the levels that are consistent with our brand and
reputation;

challenges converting the acquired company’s revenue recognition policies and forecasting the related
revenues, including subscription-based revenues and software license revenue, as well as appropriate
allocation of the customer consideration to the individual deliverables;

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;

currency and regulatory risks associated with foreign countries and potential additional cybersecurity
and compliance risks resulting from entry into new markets;

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

the inability to obtain the regulatory approvals necessary to complete transactions or to integrate
operations, or potential remedies imposed by regulatory authorities either as a condition to or following
the completion of a transaction (such as the review of our Tableau acquisition by the United Kingdom
Competition & Markets Authority, which was completed in fiscal 2020), which may include
divestitures, ownership or operational restrictions or other structural or behavioral remedies;

failure to assimilate acquired employees, which may lead to retention risk with respect to both key
acquired employees and our existing key employees or disruption to existing teams;

difficulties in re-training key employees of acquired companies and integrating them into our
organizational structure and corporate culture;

differences between our values and those of our acquired companies;

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

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

challenges with the acquired company’s third-party service providers, including those that are required
for ongoing access to third-party data;

changes to customer relationships or customer perception of the acquired business as a result of the
acquisition;

potential for acquired products to impact the profitability of existing products;

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

potential unknown liabilities associated with the acquired businesses;

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

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;

the loss of acquired unearned revenue and unbilled unearned revenue;

challenges relating to the structure of an investment, such as governance, accountability and decision-
making conflicts that may arise in the context of a joint venture or other majority ownership
investments;

difficulties in and financial costs of addressing acquired compensation structures inconsistent with our
compensation structure;

15

•

•

•

•

•

additional stock-based compensation, including the impact on stockholder dilution and our results of
operations;

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

ineffective or inadequate controls, procedures and policies at the acquired company;

in the case of foreign acquisitions, challenges caused by integrating operations over distance, and
across different languages, cultures and political environments; and

the tax effects and costs of any such acquisitions including the related integration into our tax structure
and assessment of the impact on the realizability of our future tax assets or liabilities.

Any of these risks could harm our business or negatively impact our results of operations. In addition, to

facilitate acquisitions or investments, we may seek additional equity or debt financing, which may not be
available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions or
investments, and which may affect the risks of owning our common stock. For example, 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.

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. 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.

Further, in some cases, industry-specific laws, regionally-specific, or product-specific laws, regulations, or
interpretive positions may impact our ability, as well as the ability of our customers, partners and data providers,
to collect, augment, analyze, use, transfer and share personal and other information that is integral to certain
services we provide. 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. This impact may be particularly acute in countries that have passed or are considering passing legislation
that requires data to remain localized “in country,” as this may impose financial costs on companies required to
store data in jurisdictions not of their choosing and nonstandard operational processes that add complexity and
are difficult and costly to integrate with global processes. Any failure or perceived failure by us to comply with
such requirements could have an adverse impact on our business. For example, 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, which impose significant restrictions on the ability to utilize telephone calls and text messages to mobile

16

telephone numbers as a means of communication, when the prior consent of the person being contacted has not
been obtained. We have been, and may in the future be, subject to one or more class-action lawsuits, as well as
individual lawsuits, containing allegations that one of our businesses or customers violated the TCPA. A
determination that we or our customers violated the TCPA or other communications-based statutes could expose
us to significant damage awards that could, individually or in the aggregate, materially harm our business.

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, particularly through

acquisitions, which has placed a strain on our management, administrative, operational and financial
infrastructure. We anticipate that significant additional investments 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.

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 may be unable to execute our business plan and the value of our
common stock could decline.

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, low barriers to entry, shifting customer needs and frequent
introductions of new products and services. Many prospective customers have invested substantial personnel and
financial resources to implement and integrate their current enterprise software into their businesses and therefore
may be reluctant or unwilling to migrate away from their current solution to an enterprise cloud computing
application service. Additionally, third-party developers may be reluctant to build application services on our
platform since they have invested in other competing technology platforms.

Our current competitors include:

•

•

•

•

vendors of packaged business software, as well as companies offering enterprise apps delivered
through on-premises offerings from enterprise software application vendors and cloud computing
application service providers, either individually or with others;

internally developed enterprise applications (by our potential customers’ IT departments);

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

suppliers of traditional business intelligence and data preparation products, as well as business
analytics software companies;

17

•

integration software vendors and other companies offering integration or API solutions;

• marketing vendors, which may be specialized in advertising, targeting, messaging, or campaign

automation;

•

•

•

e-commerce solutions from established and emerging cloud-only vendors and established on-premises
vendors;

traditional platform development environment companies and cloud computing development platform
companies who may develop toolsets and products that allow customers to build new apps that run on
the customers’ current infrastructure or as hosted services;

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

• AI solutions from new startups and established companies.

In addition, we may face more competition as we expand our product offerings. Some of our current and

potential competitors may have competitive advantages, such as greater name recognition, longer operating
histories, significant installed bases, broader geographic scope, and larger marketing budgets, as well as
substantially greater financial, technical, personnel, 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. We also experience competition
from smaller, younger competitors that may be more agile in responding to customers’ demands. These
competitors may be able to respond more quickly and effectively than we can to new or changing opportunities,
technologies, standards or customer requirements or provide competitive pricing. As a result, 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, which could negatively impact our future
sales and harm our business.

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

We believe that the brand identities we have developed including that of trust, customer success, innovation

and equality 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 securely, reliably and in a manner that enhances our
customers’ success. In order to maintain and enhance the strength of our brands, we may make substantial
investments to expand or improve our product offerings and services that may be accompanied by initial
complications or ultimately prove to be unsuccessful.

In addition, we have secured the naming rights to facilities controlled by third parties, such as office towers

and a transit center, and any negative events or publicity arising in connection with these facilities could
adversely impact our brand.

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.

Our ability to deliver our services is dependent on the development and maintenance of the infrastructure

of the Internet by third parties.

The Internet’s infrastructure is comprised of many different networks and services that are highly
fragmented and distributed by design. This infrastructure is run by a series of independent third-party
organizations that work together to provide the infrastructure and supporting services of the Internet under the

18

governance of the Internet Corporation for Assigned Numbers and Names (“ICANN”) and the Internet Assigned
Numbers Authority (“IANA”), now under the stewardship of ICANN.

The Internet has experienced a variety of outages and other delays as a result of damages to portions of its

infrastructure, denial-of-service attacks or related cyber incidents, and it could face outages and delays in the
future. These outages and delays could reduce the level of Internet usage or result in fragmentation of the
Internet, resulting in multiple separate Internets. These scenarios are not under our control and could reduce the
availability of the Internet to us or our customers for delivery of our Internet-based services. Any resulting
interruptions in our services or the ability of our customers to access our services could result in a loss of
potential or existing customers and harm our business.

In addition, certain countries have implemented (or may implement) legislative and technological actions

that either do or can effectively regulate access to the Internet, including the ability of Internet service providers
to limit access to specific websites or content. These actions could potentially limit or interrupt access to our
services from certain countries or Internet service providers, impede our growth, result in the loss of potential or
existing customers and harm our business.

We are subject to risks associated with our strategic investments, including partial or complete loss of

invested capital. Significant changes in the fair value of this portfolio, including changes in the valuation of
our investments in publicly traded and privately held companies, could negatively impact our financial results.

We have strategic investments in publicly traded and privately held companies, which range from early-

stage companies to more mature companies with established revenue streams and business models. 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 privately held
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. Likewise, the financial success of our
investment in any publicly held company is typically dependent upon an exit in favorable market conditions, and
to a lesser extent on liquidity events. The capital markets for public offerings and acquisitions are dynamic and
the likelihood of successful 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.

As the enterprise cloud computing ecosystem has matured, the opportunities in which we can invest have

expanded to include investments in companies concurrently with an initial public offering in addition to our
investments in early to late stage private companies. Therefore, our investment strategy and portfolio has also
expanded to include more mature companies. In certain cases, our ability to sell these investments may be
constrained by contractual obligations to hold the securities for a period of time after a public offering, including
market standoff agreements and lock-up agreements.

We record all fair value adjustments of our publicly traded and privately held equity investments through
the consolidated statement of operations. As a result, we may experience additional volatility to our statements of
operations due to changes in market prices of our investments in publicly held equity investments and the
valuation and timing of observable price changes or impairments of our investments in privately held securities.
Our ability to mitigate this volatility in any given period may be impacted by our contractual obligations to hold
securities for a set period of time. This volatility has been and could continue to be material to our results in any
given quarter and may cause our stock price to decline. While historically our investment portfolio has had a
positive impact on our financial results, that may not be true for future periods, particularly in periods of
significant market fluctuations which affect our strategic investments portfolio.

All of our investments, especially our investments in privately held companies, are subject to a risk of a

partial or total loss of investment capital. In addition, in the future we may deploy material investments in

19

individual investee companies, resulting in the increasing concentration of risk in a small number of companies.
Changes in the fair value or partial or total loss of investment capital of these individual companies could be
material to our financial statements.

Our quarterly results are likely to fluctuate, which may cause the value of our common stock to 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 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;

changes in unearned revenue and the remaining performance obligation, due to seasonality, the timing
of and compounding effects of renewals, invoice duration, size and timing, new business linearity
between quarters and within a quarter, average contract term, the collectibility of invoices related to
multiyear agreements, the timing of license software revenue recognition, or fluctuations due to foreign
currency movements, all of which may impact implied growth rates;

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

general economic or geopolitical 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;

variations in the revenue mix of our services and growth rates of our cloud subscription and support
offerings, including the timing of software license sales and sales offerings that include an on-premise
software element for which the revenue allocated to that deliverable is recognized upfront;

the seasonality of our sales cycle, including software license sales, and timing of contract execution
and the corresponding impact on revenue recognized at a point in time;

changes in our pricing policies and terms of contracts, whether initiated by us or as a result of
competition;

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

the seasonality of our customers’ businesses, especially Commerce Cloud customers, including
retailers and branded manufacturers;

fluctuations in foreign currency exchange rates such as with respect to the British Pound Sterling;

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

the number of new employees;

20

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

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

the cost, timing and management effort required 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;

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

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

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

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

income tax effects resulting from, but not limited to, tax law changes, court decisions on tax matters,
global tax developments applicable to multinationals, changes in operations or business structures, and
acquisition activity;

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;

technical difficulties or interruptions in our services;

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 and liquidity of our investment portfolio;

changes in the fair value of our strategic investments in early-to-late stage privately held and public
companies, which could negatively and materially impact our financial results, particularly in periods
of significant market fluctuations;

equity issuances, including as consideration in acquisitions;

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;

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

regulatory compliance costs; and

the impact of new accounting pronouncements and associated system implementations.

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. If we fail to meet or exceed operating results expectations or if securities
analysts and investors have estimates and forecasts of our future performance that are unrealistic or that we do
not meet, the market price of our common stock could decline. In addition, 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.

If we experience significant fluctuations in our rate of anticipated growth and fail to balance our

expenses with our revenue forecasts, our business could be harmed and the market price of our common stock
could decline.

Due to the pace of change and innovation in enterprise cloud computing services, the unpredictability of

future general economic and financial market conditions, the impact of foreign currency exchange rate

21

fluctuations, the growing complexity of our business, including the use of multiple pricing and packaging models
and the increasing amount of revenue from software license sales, and our increasing focus on enterprise cloud
computing services, we may not be able to realize our projected revenue growth plans. 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 costs capitalized to obtain revenue contracts, data center and infrastructure service contracts
or office leases, so it may not be possible to reduce costs in a timely manner, or at all, 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 and revenue growth rates may not be sustainable and may decline
in the future, and we may not be able to provide continued operating margin expansion, which could harm our
business and cause the market price of our common stock to decline.

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

We sell our services throughout the world and are subject to risks and challenges associated with

international business. We intend to continue to expand our international sales efforts. The risks and challenges
associated with sales to customers outside the United States or those that can affect international operations
generally, include:

•

•

•

•

•

•

•

•

•

•

•

•

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

regulatory frameworks or business practices favoring local competitors;

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

foreign currency fluctuations and controls, which may make our services more expensive for
international customers and could add volatility to our operating results;

compliance with multiple, conflicting, ambiguous or evolving 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 and our ability to identify and respond timely to compliance issues when they
occur;

liquidity issues or political actions by sovereign nations, including nations with a controlled currency
environment, which could result in decreased values of these balances or potential difficulties
protecting our foreign assets or satisfying local obligations;

vetting and monitoring our third-party resellers in new and evolving markets to confirm they maintain
standards consistent with our brand and reputation;

treatment of revenue from international sources, evolving domestic and international tax environments,
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;

uncertainty regarding regulation, currency, tax, and operations resulting from the United Kingdom’s
exit from the EU (“Brexit”) on January 31, 2020 and possible disruptions in trade, the sale of our
services and commerce, and movement of our people between the United Kingdom, EU, and other
locations;

uncertainty regarding the imposition of and changes in the United States’ and other governments’ trade
regulations, trade wars, tariffs, other restrictions or other geopolitical events;

changes in the public perception of governments in the regions where we operate or plan to operate;

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, which grow more complex
as we scale and expand into new markets;

22

•

•

•

•

•

•

different pricing environments;

difficulties in staffing and managing foreign operations;

different or lesser protection of our intellectual property, including increased risk of theft of our
proprietary technology and other intellectual property;

longer accounts receivable payment cycles and other collection difficulties;

natural disasters, acts of war, terrorism, or pandemics, including the ongoing Coronavirus epidemic;
and

regional economic and political conditions.

Any of these factors could negatively impact our business and results of operations. The above factors may
also negatively impact our ability to successfully expand into emerging market countries, where we have little or
no operating experience, where it can be costly and challenging to establish and maintain operations, including
hiring and managing required personnel, and difficult to promote our brand, and where we may not benefit from
any first-to-market advantage or otherwise succeed.

Because we generally 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 and support
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 and support 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 impact our revenue in future quarters. Accordingly, the effect of
significant downturns in sales and market acceptance of our services, and potential changes in our attrition rate,
may not be fully reflected in our results of operations until future periods. Our subscription model also makes it
difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new
customers must be recognized over the applicable subscription and support 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 could decline and our business may 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
contractual 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. It is difficult to 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. Historically, our subscription and support revenues primarily consisted of
subscription fees; however, with the May 2018 acquisition of MuleSoft and the August 2019 acquisition of
Tableau, subscription and support revenues also now include term software license sales. We have less
experience forecasting the renewal rates of such term software license sales. Our attrition rates may increase or
fluctuate as a result of a number of factors, including customer dissatisfaction with our services, customers’
spending levels, mix of customer base, decreases in the number of users at our customers, competition, 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.

23

If customers do not renew their subscriptions, do not purchase additional features or enhanced subscriptions

or if attrition rates increase, our business could be harmed.

If third-party developers and providers do not continue to embrace our technology delivery model and
enterprise cloud computing services, or if our customers seek warranties from us for third-party applications,
integrations, data and content, our business could be harmed.

Our success depends on the willingness of a growing community of third-party developers and technology

providers to build applications and provide integrations, data and content that are complementary to our services.
Without the continued development of these applications and provision of such integrations, data and content,
both current and potential customers may not find our services sufficiently attractive, which could impact future
sales. 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, integrations, data and content, even though not developed or sold by us, which
may expose us to potential claims, liabilities and obligations, 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 and the Euro
versus the British Pound Sterling.

We primarily conduct our business in the following regions: the Americas, Europe and Asia Pacific. 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
primarily in British Pound Sterling, Euro, Japanese Yen, Canadian Dollar and Australian Dollar against the
U.S. Dollar as well as the Euro against the British Pound Sterling. These exposures may change over time as
business practices evolve, economic and political conditions change and evolving tax regulations come into
effect. The fluctuations of currencies in which we conduct business can both increase and decrease our overall
revenue and expenses for any given fiscal period. Furthermore, fluctuations in foreign currency exchange rates
can impact our ability to accurately predict our future results and earnings. Additionally, global political events,
including Brexit and similar geopolitical developments, fluctuating commodity prices and trade tariff
developments, have caused global economic uncertainty and uncertainty about the interest rate environment,
which could amplify the volatility of currency fluctuations. Although we attempt to mitigate some of this
volatility and related risks through foreign currency hedging, our hedging activities are limited in scope and may
not effectively offset the adverse financial impacts that may result from unfavorable movements in foreign
currency exchange rates, which could adversely affect our financial condition or results of operations.

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

operations.

Our overall performance depends in part on worldwide economic and geopolitical 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 economic conditions can arise suddenly and the full
impact of such conditions can remain uncertain. In addition, geopolitical developments, such as existing and
potential trade wars and other events beyond our control, such as the Coronavirus epidemic, can increase levels
of political and economic unpredictability globally and increase the volatility of global financial markets. For
example, in response to the Coronavirus epidemic, we have shifted certain of our customer events to virtual-only
experiences and we may deem it advisable to similarly alter, postpone or cancel entirely additional customer,
employee or industry events in the future. Moreover, these conditions can affect the rate of IT spending and
could adversely affect our customers’ ability or willingness to attend our events or to purchase our enterprise

24

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 future sales and
operating results.

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 configuration
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 configuration, 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.

Social and ethical issues, including the use of AI in our offerings, may result in reputational harm and

liability.

Social and ethical issues, including the use of new and evolving technologies such as AI in our offerings,
may result in reputational harm and liability. We are increasingly building AI into many of our offerings. As with
many innovations, AI and our Customer 360 platform present additional risks and challenges that could affect
their adoption and therefore our business. For example, the development of AI and Customer 360, the latter of
which provides information regarding our customers’ customers, presents emerging ethical issues and if we
enable or offer solutions that draw controversy due to their perceived or actual impact on human rights, privacy,
employment, or in other social contexts, we may experience brand or reputational harm, competitive harm or
legal liability. Data practices by us or others that result in controversy could impair the acceptance of artificial
intelligence solutions. This in turn could undermine the decisions, predictions, or analysis AI applications
produce, subjecting us to competitive harm, legal liability, and brand or reputational harm.

In addition, positions we take on social and ethical issues may be unpopular with some customers or

potential customers, which may impact our ability to attract or retain such customers. We also may choose not to
conduct business with potential customers or discontinue business with existing customers due to these positions.
Our brand is also associated with our public commitments to sustainability, equality and ethical use, and any

25

perceived changes in our dedication to these commitments could adversely impact our relationships with our
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. 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.

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.

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

Any adverse determination related to intellectual property claims or other litigation could prevent us from

offering our services to others, could be material to our financial condition or cash flows, or both, or could
otherwise adversely affect our operating results. In addition, depending on the nature and timing of any such
dispute, an unfavorable resolution of a legal matter could materially affect our current or future results of
operations or cash flows in a particular quarter.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary

technology and our brand, cause us to incur significant expenses and harm our business.

If we fail to protect our intellectual property rights adequately, our competitors may gain access to our
technology, affecting our brand, causing us to incur significant expenses and harming our business. 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 many U.S. patents and pending U.S. and international patent
applications, 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

26

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 and expense to monitor and protect our intellectual
property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights
or to establish the validity of our proprietary rights. If we fail to protect our intellectual property rights, it could
impact our ability to protect our technology and brand. Furthermore, any litigation, whether or not it is resolved
in our favor, could result in significant expense to us, cause us to divert time and resources and harm our
business.

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. For example, in February
2020, Keith Block resigned as co-CEO and as a director of the Company. 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.

The technology industry is subject to 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, data scientists 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, developing, integrating and retaining highly skilled employees with appropriate
qualifications. These difficulties may be amplified by evolving restrictions on immigration, travel, or availability
of visas for skilled technology workers. These difficulties may potentially be further amplified by the high cost of
living in the San Francisco Bay Area, where our headquarters are located. 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.

In addition, we believe in the importance of our corporate culture, which fosters dialogue, collaboration,
recognition and a sense of family. As our organization grows and expands globally, and as employees’ workplace
expectations develop, we may find it increasingly difficult to maintain the beneficial aspects of our corporate
culture. This could negatively impact our ability to attract and retain employees or our reputation with customers
and could negatively impact our future growth.

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 across our varying and diverse offerings. 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

27

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 service offerings 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
sales organization changes may result in a temporary reduction of productivity, which could negatively impact
our rate of growth and operating results. 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 and recent global tax

developments may impact our financial results.

We are subject to income taxes in the United States and various jurisdictions outside of the United States.
Significant judgment is often required in the determination of our worldwide provision for income taxes. Our
effective tax rate could be impacted by changes in the earnings and losses in countries with differing statutory tax
rates, changes in operations, 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, the
applicability of withholding taxes, effects from acquisitions, and changes in accounting principles and tax laws.
Any changes, ambiguity, or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies
and positions could also materially impact our income tax liabilities.

We may also be subject to additional tax liabilities and penalties due to changes in non-income based 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, or changes to the business operations including acquisitions. Any resulting
increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results.

We are also subject to tax examinations in multiple jurisdictions. While we regularly evaluate new

information that may change our judgment resulting in recognition, derecognition or changes 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 of financial positions.

As our business continues to grow, increasing our brand recognition and profitability, we may be subject to

additional public scrutiny and income tax obligations. Furthermore, our growing prominence may bring public
attention to our tax profile, and if perceived negatively, may cause brand or reputational harm.

As we utilize our tax credits and net operating loss carry-forwards, we may be unable to mitigate our tax

obligations to the same extent as in prior years, which could have a material impact to our future cash flows. In
addition, changes to our operating structure, including the integration of acquisitions, may result in cash tax
obligations.

In addition, recent global tax developments applicable to multinational businesses may have a material
impact to our business, cash flow from operating activities, or financial results. Such developments, for example,
include the Organization for Economic Co-operation and Development, the European Commission, and certain
major jurisdictions’ taxation of the digital economy.

Our debt service obligations, lease commitments and other contractual obligations may adversely affect

our financial condition and cash flows from operations.

As of January 31, 2020, we had a substantial level of debt, including the 2023 and 2028 Senior Notes
(“Senior Notes”), the loan we assumed when we purchased an office building located at 50 Fremont Street in San

28

Francisco, California (“50 Fremont”) due June 2023 and lease arrangements. Additionally, we have significant
contractual commitments, such as commitments with infrastructure service providers, which are not reflected on
our consolidated balance sheets. In April 2018, we amended and restated our revolving credit facility under
which we can draw down up to $1.0 billion. Maintenance of our indebtedness and contractual commitments and
any additional issuances 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; and

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

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. Any new or refinanced debt may be subject to
substantially higher interest rates, which could adversely affect our financial condition and impact our business.

In addition, adverse changes by any rating agency to our credit rating may negatively impact the value and
liquidity of both our debt and equity securities, as well as the potential costs associated with a refinancing of our
debt. Downgrades in our credit ratings could also affect the terms of any such refinancing or future financing or
restrict our ability to obtain additional financing in the future.

Our senior unsecured notes and senior unsecured credit agreements impose restrictions on us and require us
to maintain compliance with specified covenants. Our ability to comply with these covenants may be affected by
events beyond our control. 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 debt and
borrowings. Any required repayment of our debt 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.

New lease accounting guidance requires that we now record a liability for operating lease activity on our
consolidated balance sheet, which resulted in an increase in both our assets and liabilities. The implementation of
this guidance, including the increase in operating and finance lease liabilities on our consolidated balance sheet,
may impact our ability to obtain the necessary financing from financial institutions at commercially viable rates
or at all. Our lease terms may include options to extend or terminate the lease. These options are reflected in the
operating lease right-of-use (“ROU”) asset, which represents our right to use an underlying asset for the lease
term, and lease liability only when it is reasonably certain that we will exercise that option. We reassess the lease
term if and when a significant event or change in circumstances occurs within our control. The potential impact
of these options to extend could be material to our financial position and financial 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 (including the

29

ongoing Coronavirus epidemic) 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. Our corporate headquarters, and a significant portion of
our research and development activities, IT 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.

Climate change may have a long-term impact on our business.

While we seek to mitigate our business risks associated with climate change by establishing robust

environmental programs and partnering with organizations who are also focused on mitigating their own climate
related risks, we recognize that there are inherent climate related risks wherever business is conducted. Access to
clean water and reliable energy in the communities where we conduct our business, whether for our offices, data
centers, vendors, customers or other stakeholders, is a priority. Any of our primary locations may be vulnerable
to the adverse effects of climate change. For example, our California headquarters are projected to be vulnerable
to future water scarcity due to climate change. Climate related events, including the increasing frequency of
extreme weather events and their impact on U.S. critical infrastructure, have the potential to disrupt our business,
our third-party suppliers, or the business of our customers, and may cause us to experience higher attrition, losses
and additional costs to maintain or resume operations.

Current and future accounting pronouncements and other financial and non-financial reporting

standards may negatively impact our financial results.

We regularly monitor our compliance with applicable financial reporting standards and review new
pronouncements and interpretations that are relevant to us. As a result of new standards, changes to existing
standards and changes in their interpretation, we may be required to change our accounting policies, to alter our
operational policies, to implement new or enhance existing systems so that they reflect new or amended financial
reporting standards, and to adjust our published financial statements. Such changes may have an adverse effect
on our business, financial position, and operating results, or cause an adverse deviation from our revenue and
operating profit targets, which may negatively impact our financial results.

In addition, as we work to align with the recommendations of the Financial Stability Board’s Task Force on
Climate-related Financial Disclosures, (“TCFD”), the Sustainability Accounting Standards Board (“SASB”), and
our own Environmental, Social, Governance (“ESG”) materiality assessment, we may expand our disclosures in
these areas. This transparency is consistent with our commitment to executing on a strategy that reflects the
economic, social, and environmental impact we have on the world while advancing and complementing our
business strategy. These metrics, whether it be the standards we set for ourselves or a failure to meet these
metrics, may influence our reputation and the value of our brand. Our failure to achieve progress on our metrics
on a timely basis, or at all, could adversely affect our business, financial performance, and growth.

By electing to set and share publicly these corporate ESG metrics, our business may also face increased

scrutiny related to ESG activities. As a result, we could damage our reputation and the value of our brand if we
fail to act responsibly in the areas in which we report. Any harm to our reputation resulting from setting these
metrics or our failure or perceived failure to meet such metrics could adversely affect our business, financial
performance, and growth.

We may be subject to risks related to government contracts and related procurement regulations.

Our contracts with federal, state, local, and foreign government entities are subject to various procurement

regulations and other requirements relating to their formation, administration and performance. We may be
subject to audits and investigations relating to our government contracts, and any violations could result in

30

various civil and criminal penalties and administrative sanctions, including termination of contracts, refunding or
suspending of payments, forfeiture of profits, payment of fines, and suspension or debarment from future
government business. In addition, such contracts may provide for termination by the government at any time,
without cause. Any of these risks related to contracting with governmental entities could adversely impact our
future sales and operating results.

We are subject to governmental export and import controls that could impair our ability to compete in

international markets and subject us to liability if we are not in full compliance with applicable laws.

Our solutions are subject to export and import controls, including the Commerce Department’s Export
Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations
established by the Treasury Department’s Office of Foreign Assets Control. If we fail to comply with these U.S.
export control laws and import laws we and certain of our employees could be subject to substantial civil or
criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on us
and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or
managers. Obtaining the necessary authorizations, including any required license, may be time-consuming, is not
guaranteed and may result in the delay or loss of sales opportunities. Furthermore, the U.S. export control laws
and economic sanctions laws prohibit the shipment of certain products and services to U.S. embargoed or
sanctioned countries, governments and persons. Even though we take precautions to prevent our solutions from
being provisioned or provided to U.S. sanctions targets in violation of applicable regulations, our solutions could
be provisioned to those targets or provided by our resellers despite such precautions. Any such sales could have
negative consequences, including government investigations, penalties and reputational harm. Changes in our
solutions or changes in export and import regulations may create delays in the introduction, sale and deployment
of our solutions in international markets or prevent the export or import of our solutions to certain countries,
governments or persons altogether. Any decreased use of our solutions or limitation on our ability to export or
sell our solutions would likely adversely affect our business, financial condition and results of operations.

Risks Related to 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 historically been highly volatile.
Accordingly, the market price of our common stock has been and is likely to continue to be subject to wide
fluctuations. Factors affecting the market price of our common stock include:

•

•

•

•

•

•

variations in our operating results, earnings per share, cash flows from operating activities, unearned
revenue, remaining performance obligation, year-over-year growth rates for individual service
offerings and other financial metrics and non-financial metrics, such as transaction usage volumes and
other usage 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, for example, future revenue,
unearned revenue, remaining performance obligation, cash flows from operating activities and earnings
per share, the accuracy of which may be impacted by various factors, many of which are beyond our
control, including general economic and market conditions and unanticipated delays in the integration
of acquired companies as a result of regulatory review;

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;

31

•

•

•

•

•

•

•

•

•

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

the coverage of our common stock by the financial media, including television, radio and press reports
and blogs;

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, geopolitical conditions, including global trade concerns, 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 or a capital
raising transaction;

issuance of debt or other convertible securities; and

environmental, social, governance and other issues impacting the Company’s reputation.

In addition, if the market for technology stocks or the stock market in general experiences uneven investor
confidence, the market price of our common stock could decline for reasons unrelated to our business, operating
results or financial condition. The market price of our 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.

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;

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

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

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

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a

change in control of our company. Section 203 imposes certain restrictions on merger, business combinations
and other transactions between us and holders of 15 percent or more of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

32

ITEM 2. PROPERTIES

As of January 31, 2020, our executive and principal offices for sales, marketing, professional and

administrative services and development consist of approximately 2.1 million square feet of leased and owned
property in San Francisco. Of this total, we lease and occupy approximately 1.3 million square feet and own and
occupy a majority of the approximately 820,000 square feet of total owned space at 50 Fremont Street. Of the
total leased and owned space in San Francisco, 2.1 million square feet is concentrated in our urban campus,
which includes 50 Fremont Street, 350 Mission Street, and Salesforce Tower located at 415 Mission Street
(“Salesforce Tower”), collectively defined as our “Urban Campus”. Each of the three buildings occupy one of the
four corners of a major intersection in downtown San Francisco. In addition, we lease approximately 451,000
square feet in San Francisco that is currently sublet. This space is not included in the amounts above.

In November 2018, we entered into a lease agreement for approximately 325,000 rentable square feet of

office space in a building to be constructed as part of our urban campus in San Francisco, California. As of
January 31, 2020, construction has not commenced on the building and is dependent on the developer obtaining
approvals from the City and County of San Francisco. We expect to begin occupying the space in fiscal 2024.

In November 2019, the Company entered into an agreement to purchase two real estate assets in San

Francisco, California for approximately 86,000 square feet of office space near our Urban Campus. The
transaction is expected to close in the Company’s first quarter of fiscal 2021, subject to customary closing
conditions.

We also lease space in various locations throughout the United States for local sales and professional

services personnel. Our foreign subsidiaries lease office space in a number of countries in Europe, North
America, Asia, South America, Africa and Australia for our international operations.

We also operate data centers in the U.S., Europe and Asia pursuant to various co-location lease

arrangements.

We believe that our existing facilities and offices are adequate to meet our current requirements. If we
require additional space, we believe that we will be able to obtain such space on acceptable, commercially
reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

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.

For more information regarding legal proceedings, see Note 15 “Legal Proceedings” to the consolidated

financial statements in Item 8 of Part II.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

33

ITEM 4A. INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following sets forth certain information regarding our current executive officers as of February 28, 2020

(in alphabetical order):

Name

Age

Position

Joe Allanson . . . . . . . . . . . . . . . . . . .
Marc Benioff . . . . . . . . . . . . . . . . . . .
Alexandre Dayon . . . . . . . . . . . . . . .
Parker Harris . . . . . . . . . . . . . . . . . . .
Mark Hawkins . . . . . . . . . . . . . . . . . .
Brent Hyder . . . . . . . . . . . . . . . . . . . .
Srinivas Tallapragada . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Bret Taylor
Amy Weaver . . . . . . . . . . . . . . . . . . .

56 Chief Accounting Officer and Corporate Controller
55 Chair of the Board, CEO and co-Founder
President and Chief Strategy Officer
52
53 Co-Founder and Chief Technology Officer
President and Chief Financial Officer
60
President and Chief People Officer
55
President and Chief Engineering Officer
50
President and Chief Operating Officer
39
President and Chief Legal Officer
52

Joe Allanson has served as our Chief Accounting Officer and Corporate Controller since February 2014.
Prior to that, Mr. Allanson served as our Senior Vice President, Chief Accountant and Corporate Controller since
July 2011, Senior Vice President, Corporate Controller from July 2007 to July 2011, and served in various other
management positions in finance since joining Salesforce in 2003. Prior to Salesforce, Mr. Allanson spent four
years at Autodesk, Inc. and three years at Chiron Corporation in key corporate finance positions. Previously, he
worked at Arthur Andersen LLP for 11 years in its Audit and Business Advisory Services group. Mr. Allanson
also serves on the Board of Trustees of the University of San Francisco. Mr. Allanson graduated from Santa
Clara University with a B.S. in Accounting.

Marc Benioff is Chair, CEO and co-Founder of Salesforce and a pioneer of cloud computing. Under
Mr. Benioff’s leadership, Salesforce is the fastest-growing top-five enterprise software company and the #1
provider of CRM software globally. Mr. Benioff was named Innovator of the Decade by Forbes and recognized
as one of the World’s 50 Greatest Leaders by Fortune and one of the 10 Best-Performing CEOs by Harvard
Business Review. A member of the World Economic Forum Board of Trustees, Mr. Benioff serves as the
inaugural chair of WEF’s Forum Center for the Fourth Industrial Revolution in San Francisco. Mr. Benioff also
serves as chair of the Salesforce Foundation. Mr. Benioff received a B.S. in Business Administration from the
University of Southern California, where he is on its Board of Trustees.

Alexandre Dayon has served as our President and Chief Strategy Officer since November 2017. Prior to
that, he served as our President and Chief Product Officer since February 2016, President, Products from March
2014 to February 2016, President, Applications and Platform from December 2012 to March 2014, Executive
Vice President, Applications from September 2011 to December 2012, Executive Vice President, Product
Management from February 2010 to December 2012, and Senior Vice President, Product Management from
September 2008 to January 2010. Mr. Dayon joined Salesforce through the acquisition of InStranet, a leading
knowledge-base company, where he was a founder and served as CEO. Prior to InStranet, Mr. Dayon was a
founding member of Business Objects SA where he led the product group for more than 10 years. Mr. Dayon,
who holds several patents, is focused on creating business value out of technology disruption. Mr. Dayon holds a
master’s degree in electrical engineering from Ecole Supérieure d’Electricité (SUPELEC) in France.

Parker Harris has served as a Director since August 2018 and as our co-Founder and Chief Technology

Officer since September 2016. Mr. Harris co-founded Salesforce in February 1999 and has served in senior
technical positions since inception. Prior to that, from December 2004 to February 2013, Mr. Harris served as our
Executive Vice President, Technology. Prior to Salesforce, Mr. Harris was a Vice President at Left Coast
Software, a Java consulting firm he co-founded, from October 1996 to February 1999. Mr. Harris received a B.A.
from Middlebury College.

Mark Hawkins has served as our President and Chief Financial Officer and Principal Financial Officer since

August 2017. Prior to that, he served as our Chief Financial Officer, Principal Financial Officer and Executive

34

Vice President since August 2014. Prior to Salesforce, Mr. Hawkins served as Executive Vice President and
Chief Financial Officer and principal financial officer for Autodesk, Inc., a design software and services
company, from April 2009 to July 2014. From April 2006 to April 2009, Mr. Hawkins served as Senior Vice
President, Finance and Information Technology, and Chief Financial Officer of Logitech International S.A.
Previously, Mr. Hawkins held various finance and business-management roles with Dell Inc. and Hewlett-
Packard Company. Mr. Hawkins currently serves as a director of Plex Systems, Inc., where he is the Chairman of
the Audit Committee, and SecureWorks, Inc., where he is also a member of the Compensation Committee and
the Chairman of the Audit Committee. Mr. Hawkins holds a B.A. in Operations Management from Michigan
State University and an M.B.A. in Finance from the University of Colorado. He also completed the Advanced
Management Program at Harvard Business School.

Brent Hyder has served as our President and Chief People Officer since September 2019. Prior to joining
Salesforce, Mr. Hyder served in several senior management roles at Gap Inc., a global clothing and accessories
retailer, from 2004 to 2019, including Executive Vice President and Chief People Officer from February 2018 to
September 2019, Executive Vice President, Global Talent and Sustainability from May 2017 to February 2018,
Executive Vice President and Chief Operating Officer, Gap from June 2016 to May 2017, and Senior Vice
President, Human Resources, Gap from September 2014 to June 2016. Mr. Hyder holds a B.A. in retail
management from Brigham Young University.

Srini Tallapragada has served as our President and Chief Engineering Officer since December 2019. Prior
to that, he served as President, Technology since June 2018, Executive Vice President, Engineering from March
2014 to June 2018 and Senior Vice President, Engineering from May 2012 to February 2014. From April 2011 to
June 2012, Mr. Tallapragada served as a Senior Vice President at Oracle. From February 2009 to April 2011
Mr. Tallapragada served as a Senior Vice President at SAP. Previously, Mr. Tallapragada held various roles at
Oracle, Infosys and Asian Paints. Mr. Tallapragada holds a masters degree from the School of Human Resources
at XLRI, Jamshedpur and a B.T. in Computer Science from the National Institute of Technology, Warangal.

Bret Taylor has served as our President and Chief Operating Officer since December 2019. Prior to that, he
served as our President and Chief Product Officer from November 2017 to December 2019 and President, Quip
from August 2016 to November 2017. Mr. Taylor joined Salesforce through the acquisition of Quip, Inc., where
he was a co-founder and served as CEO since September 2012. Previously, Mr. Taylor served as Chief
Technology Officer of Facebook, Inc. from August 2009 to July 2012 and Chief Executive Officer of
FriendFeed, Inc., a social network, from October 2007 to August 2009. From June 2007 to September 2007,
Mr. Taylor served as an entrepreneur-in-residence at Benchmark, a venture capital firm. Prior to June 2007,
Mr. Taylor served as Group Product Manager at Google Inc. Mr. Taylor currently serves as a director of Twitter,
Inc., where he is also a member of the Compensation Committee. He previously served on the Board of Directors
of Axon Enterprise, Inc. (formerly known as TASER International, Inc.), a protection technologies company.
Mr. Taylor holds a B.S. and an M.S. in Computer Science from Stanford University.

Amy Weaver has served as our President and Chief Legal Officer since January 2020. Prior to that, she
served as our President, Legal & Corporate Affairs and General Counsel from February 2017 to January 2020,
our Executive Vice President and General Counsel from July 2015 to February 2017 and our Senior Vice
President and General Counsel from October 2013 to July 2015. Prior to Salesforce, Ms. Weaver served as
Executive Vice President and General Counsel at Univar Inc. from December 2010 to June 2013. Previously,
Ms. Weaver was Senior Vice President and Deputy General Counsel at Expedia, Inc. and before that she
practiced law at Cravath, Swaine & Moore LLP and Perkins Coie LLP. Ms. Weaver also served as a clerk on the
U.S. Court of Appeals, Ninth Circuit and as a legislative assistant to a member of the Hong Kong Legislative
Council. Ms. Weaver holds a B.A. in Political Science from Wellesley College and a J.D. from Harvard Law
School.

35

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information for Common Stock

Our common stock is traded on the New York Stock Exchange under the symbol “CRM.”

Dividend Policy

We have never paid any cash dividends on our common stock. Our board of directors currently intends to
retain any future earnings to support operations and to finance the growth and development of our business and
does not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination
related to our dividend policy will be made at the discretion of our board.

Stockholders

As of January 31, 2020, there were 495 registered stockholders of record of our common stock, including
The Depository Trust Company, which holds shares of Salesforce common stock on behalf of an indeterminate
number of beneficial owners.

Stock Performance Graph

The following shall not be deemed incorporated by reference into any of our other filings under the

Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended.

The graph below compares the cumulative total stockholder return on our common stock with the
cumulative total return on the Standard & Poor’s 500 Index (“S&P 500 Index”), Nasdaq Computer & Data
Processing Index (“Nasdaq Computer”) and the Nasdaq 100 Index for each of the last five fiscal years ended
January 31, 2020, assuming an initial investment of $100. Data for the S&P 500 Index, Nasdaq Computer and
Nasdaq 100 Index assume reinvestment of dividends.

The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to

forecast, future performance of our common stock.

Comparison of Cumulative Total Return of salesforce.com, inc.  

S
R
A
L
L
O
D

350

300

250

200

150

100

50

0

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

salesforce.com

S&P 500 Index

Nasdaq Computer

Nasdaq 100 Index

36

salesforce.com . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq Computer . . . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq 100 Index . . . . . . . . . . . . . . . . . . . . . . . . .

$100
$100
$100
$100

$121
$ 97
$105
$103

$140
$114
$129
$123

$202
$142
$183
$168

$269
$136
$179
$166

$323
$162
$257
$217

1/31/2015

1/31/2016

1/31/2017

1/31/2018

1/31/2019

1/31/2020

Recent Sales of Unregistered Securities

In connection with an acquisition, the Company issued 52,302 shares of Company common stock on

November 1, 2019. In addition, in connection with the acquisition of MetaMind, Inc. in April 2016, the Company
issued 11,126 shares of Company common stock on January 2, 2020. 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 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with our audited

consolidated financial statements and related notes thereto and with Management’s Discussion and Analysis of
Financial Condition and Results of Operations, which are included elsewhere in this Form 10-K. The
consolidated statement of operations data for fiscal 2020, 2019 and 2018, and the selected consolidated balance
sheet data as of January 31, 2020 and 2019 are derived from, and are qualified by reference to, the audited
consolidated financial statements that are included in this Form 10-K. The consolidated statement of operations
data for fiscal 2017 and 2016 and the consolidated balance sheet data as of January 31, 2018, 2017 and 2016 are
derived from audited consolidated financial statements which are not included in this Form 10-K after certain
reclassifications were made to conform to the current period presentation described in Note 1 “Summary of
Business and Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in
Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

The consolidated balance sheet data as of January 31, 2020 reflects the prospective adoption of Accounting

Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), also referred to as Topic 842. The
consolidated statement of operations data for fiscal 2019, 2018 and 2017, and the selected consolidated balance
sheet data as of January 31, 2019, 2018 and 2017 reflect the retrospective adoption of Accounting Standards
Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (“Topic 606”)”. Additionally, the
consolidated statement of operations data for fiscal 2019 and the selected consolidated balance sheet data as of
January 31, 2019 reflect the prospective adoption of ASU No. 2016-01, “Financial Instruments-Overall (Subtopic
825-10)” (“ASU 2016-01”).

(in millions, except per share data)

Fiscal Year Ended January 31,

2020

2019

2018 (as
adjusted)

2017 (as
adjusted)

2016

Consolidated Statement of Operations
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,098 $13,282 $10,540 $8,437 $6,667
115
Income from operations (1) . . . . . . . . . . . . . . . . . . . . . . . . .
218
454
(16)
Gains (losses) on strategic investments, net
. . . . . . . . . . . .
31
19
(111)
. . . . . . . . . .
Benefit from (provision for) income taxes (2)
144
(60)
360
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(47)
323
0.49 $ 0.46 $ (0.07)
Diluted net income (loss) per share . . . . . . . . . . . . . . . . . . . $

535
542
127
1,110
1.43 $

297
427
(580)
126
0.15 $

(1) Fiscal 2020 income from operations includes a $166 million one-time non-cash charge related to the
accounting for our business combination with Salesforce.org, a related party, in which there was the
settlement of the reseller agreement between the two companies.

37

(2) Amounts include a benefit related to the partial release of the valuation allowance of $612 million,
$2 million, $226 million, and $1 million for fiscal 2019, 2018, 2017 and 2016, respectively.

(in millions)

As of January 31,

2020

2019

2018 (as
adjusted)

2017 (as
adjusted)

2016

Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities . . . . . . . . . $ 7,947 $ 4,342 $ 4,521 $ 2,209 $ 2,725
90
(Negative) working capital (3) . . . . . . . . . . . . . . . . . . . . . . .
12,763
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,119
Noncurrent debt and other noncurrent liabilities (4) . . . . . . .
(653)
Retained earnings (accumulated deficit) . . . . . . . . . . . . . . . .
5,003
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,013)
18,286
2,824
275
8,230

(483)
21,984
1,541
635
10,376

(572)
30,737
3,877
1,735
15,605

1,118
55,126
6,396
1,861
33,885

(3) We consider all of our marketable debt securities to be available to support current liquidity needs including
those with maturity dates beyond one year, and therefore we classify these securities within current assets
on the consolidated balance sheets. For consistency in presentation, (negative) working capital in the table
above as of January 31, 2016 includes amounts previously reported in Marketable securities, noncurrent. In
addition, other reclassifications were made to balances as of January 31, 2018, 2017, and 2016 to conform to
the current period presentation.

(4) Amounts include noncurrent operating lease liabilities of $2.4 billion for fiscal 2020 and $0 for fiscal 2019,

2018, 2017 and 2016.

38

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion contains forward-looking statements, including, without limitation, our

expectations and statements regarding our outlook and future revenues, expenses, results of operations, liquidity,
plans, strategies and management objectives and any assumptions underlying any of the foregoing. Our actual
results may differ significantly from those projected in the forward-looking statements. Our forward-looking
statements and factors that might cause future actual results to differ materially from our recent results or those
projected in the forward-looking statements include, but are not limited to, those discussed in the section titled
“Forward-Looking Information” and “Risk Factors” of this Annual Report on Form 10-K. Except as required by
law, we assume no obligation to update the forward-looking statements or our risk factors for any reason.

The following section generally discusses Fiscal Year 2020 and 2019 items and year-to-year comparisons
between Fiscal Year 2020 and 2019, as well as certain Fiscal Year 2018 items. Discussions of Fiscal Year 2018
items and year-to-year comparisons between fiscal year 2019 and 2018 that are not included in this Form 10-K
can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2019.

Overview

We are a global leader in customer relationship management (“CRM”) technology that brings companies

and customers together. We introduced our first CRM solution in 2000, and we have since expanded our service
offerings with new editions, features and platform capabilities. Our core mission is to enable our customers of
every size and industry to connect with their customers in new ways through existing and emerging technologies,
including cloud, mobile, social, blockchain, voice and artificial intelligence (“AI”), to transform their businesses.
Our Customer 360 platform unites sales, service, marketing, commerce, analytics and more to give our customers
a single source of information about their customers.

Website references throughout this document are provided for convenience only, and the content on the

referenced websites is not incorporated by reference into this report.

Highlights from the Fiscal Year 2020.

• Acquisitions: During fiscal 2020 we completed the acquisition of Tableau Software, Inc. (“Tableau”)

for $14.8 billion in common stock issued, cash and fair value of equity assumed, ClickSoftware
Technologies Ltd. (“ClickSoftware”) for $1.4 billion in cash, common stock issued and fair value of
equity assumed, and Salesforce.org for $300 million in cash.

• Revenue: Total fiscal 2020 revenue was $17.1 billion, an increase of 29 percent year-over-year. Total

fiscal 2020 revenues included approximately $228 million and $689 million of revenues from
Salesforce.org and Tableau, respectively.

• Earnings per Share: Fiscal 2020 diluted earnings per share was $0.15, as compared to diluted

earnings per share of $1.43 from a year ago.

• Cash: Total cash, cash equivalents and marketable securities ended the fiscal year at $7.9 billion. Cash
provided by operations for fiscal 2020 was $4.3 billion, an increase of 27 percent year-over-year.

• Remaining Performance Obligation: Remaining performance obligation ended the fiscal year at
approximately $30.8 billion, an increase of 20 percent year-over-year. Our remaining performance
obligation includes approximately $450 million and $650 million related to the Salesforce.org business
combination in June 2019 and the Tableau acquisition in August 2019, respectively. Current remaining
performance obligation ended the fiscal year at approximately $15.0 billion, an increase of 26 percent
year-over-year.

39

We continue to invest for future growth through focusing on multi-cloud adoption by our existing

customers, growing our relationships with our enterprise customers, expanding internationally and expanding and
strengthening our ecosystem of partners and independent software vendors (“ISVs”). As a result, we continue to
win customers from competitors in the markets in which we compete. In addition, we continue to expand in the
growing addressable markets across all of our service offerings providing additional opportunities for growth in
our business and results.

We 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 through a
disciplined and thoughtful acquisition process. 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 part of our business and
growth strategy, we are delivering innovative solutions in new categories, including analytics and integration.
We drive innovation organically and to a lesser extent through acquisitions, such as our recent business
combination with Salesforce.org in June 2019 and acquisitions of Tableau in August 2019 and ClickSoftware in
October 2019.

As a result of our aggressive growth plans and integration of our previously acquired businesses, we have
incurred significant expenses for equity awards and amortization of purchased intangibles, which have reduced
our operating income.

We periodically make changes to our sales organization to position us for long-term growth, which has in
the past and could again in the future result in temporary disruptions to our sales productivity. In addition, we
have experienced, and may at times in the future experience, more variation from our forecasted expectations of
new business activity due to longer and less predictable sales cycles and increasing complexity of our business,
which includes an expanded mix of products and various revenue models resulting from acquisitions. While we
do not expect any of these changes to have a material adverse effect on our business or our ability to meet our
near-term or long-term revenue targets, slower growth in new business in a given period could negatively affect
our revenues in future periods, as well as remaining performance obligation in current or future periods,
particularly if experienced on a sustained basis.

In December 2019, a novel strain of Coronavirus was reported in Wuhan, China. The World Health

Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” The
extent of the impact of the Coronavirus on our operational and financial performance will depend on certain
developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles,
impact on our customer, employee or industry events, and effect on our vendors, all of which are uncertain and
cannot be predicted. For example, in response to the Coronavirus epidemic, we have shifted certain of our
customer events to virtual-only experiences and we may deem it advisable to similarly alter, postpone or cancel
entirely additional customer, employee or industry events in the future. At this point, the extent to which the
Coronavirus may impact our financial condition or results of operations is uncertain. Due to our subscription
based business model, the effect of the Coronavirus may not be fully reflected in our results of operations until
future periods, if at all.

The expanding global scope of our business and the heightened volatility of global markets expose us to the

risk of fluctuations in foreign currency markets. Fluctuations in foreign currency exchange rates negatively
impacted our revenue results for fiscal 2020 and had a minimal impact on our remaining performance obligation
as of January 31, 2020. We expect these fluctuations to continue in the future.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2020, for example, refer to the fiscal year ending

January 31, 2020.

40

Operating Segments

We operate as one segment. See Note 1 “Summary of Business and Significant Accounting Policies” to the

consolidated financial statements for our discussion about segments.

Adoption of New Accounting Standards

We adopted Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), also
referred to as Topic 842 at the beginning of fiscal 2020, and as a result, the consolidated balance sheet as of
January 31, 2020 is not comparable with that of January 31, 2019. In addition, in fiscal 2019 we prospectively
adopted Accounting Standards Update No. 2016-01, “Financial Instrument-Overall (Subtopic 825-10)” (“ASU
2016-01”). See Note 1, “Summary of Business and Significant Accounting Policies” of the Notes to Consolidated
Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated
herein by reference.

Sources of Revenues

We derive our revenues from two sources: subscription and support revenues and related professional

services. Subscription and support revenues accounted for approximately 94 percent of our total revenues for
fiscal 2020.

Subscription and support revenues are primarily comprised of subscription fees from customers accessing

our enterprise cloud computing services (collectively, “Cloud Services”). With the May 2018 acquisition of
MuleSoft and the August 2019 acquisition of Tableau, subscription and support revenues also include revenues
associated with software licenses. Software license revenues include fees from the sales of term and perpetual
licenses. Revenues from software licenses are generally recognized upfront when the software is made available
to the customer and revenues from the related support is generally recognized ratably over the contract term.
Revenues from software licenses represent less than ten percent of total subscription and support revenue for
fiscal 2020, 2019 and 2018.

The revenue growth rates of each of our core service offerings, as described below in “Results of

Operations”, fluctuate from quarter to quarter and over time. Additionally, we manage the total balanced product
portfolio to deliver solutions to our customers, and as a result, the revenue result for each offering is not
necessarily indicative of the results to be expected for any subsequent quarter. In addition, some of our Cloud
Service offerings have similar features and functions. For example, customers may use the Sales Cloud, the
Service Cloud or the Salesforce Platform to record account and contact information, which are similar features
across these service offerings. Depending on a customer’s actual and projected business requirements, more than
one service offering may satisfy the customer’s current and future needs. We record revenue based on the
individual products ordered by a customer, 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 service offering over time may
not be meaningful.

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

Unearned 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 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 unearned
revenue or in revenue depending on whether transfer of control to customers has occurred. In general, we collect
our billings in advance of the subscription service period. 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

41

the subsequent renewal invoice may occur in different quarters. There is a disproportionate weighting toward
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 typically our largest
collections and operating cash flow quarter. Conversely, our third quarter has historically been our smallest
operating cash flow quarter.

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

Accounts Receivable
(as of period ended)

Unearned Revenue
(as of period ended)

Net Cash Provided by Operating
Activities
(three months ended)

Remaining Performance Obligation

Our remaining performance obligation represents all future revenue under contract that has not yet been
recognized as revenue and includes unearned revenue and unbilled amounts. Our current remaining performance
obligation represents future revenue under contract that is expected to be recognized as revenue in the next 12
months.

Remaining performance obligation is not necessarily indicative of future revenue growth and is influenced

by several factors, including seasonality, the timing of renewals, average contract terms, foreign currency
exchange rates and fluctuations in new business growth. Unbilled portions of the remaining performance

42

obligation denominated in foreign currencies are revalued each period based on the period end exchange rates.
For multi-year subscription agreements billed annually, the associated unbilled balance and corresponding
remaining performance obligation is typically high at the beginning of the contract period, zero just prior to
renewal, and increases if the agreement is renewed. Low remaining performance obligation 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.

Remaining performance obligation consisted of the following (in billions):

Remaining Performance Oblication (RPO)
(as of period ended)

(1)

(2)

(3)

Includes approximately $450 million and $650 million of remaining performance obligation related to the
Salesforce.org business combination in June 2019 and the Tableau acquisition in August 2019, respectively.
Includes approximately $400 million and $550 million of remaining performance obligation related to the
Salesforce.org business combination in June 2019 and the Tableau acquisition in August 2019, respectively.
Includes approximately $350 million of remaining performance obligation related to the Salesforce.org
business combination in June 2019.

Cost of Revenues and Operating Expenses

Impact of Acquisitions

The comparability of our operating results is impacted by our recent acquisitions, including the acquisition
of Tableau in August 2019. Expense contributions by expense type from our recent acquisitions generally may
not be separately identifiable due to the integration of these businesses into our existing operations, or may be
insignificant to our results of operations during the periods presented.

Cost of Revenues

Cost of subscription and support revenues primarily consists of expenses related to delivering our service
and providing support, including the costs of data center capacity, certain fees paid to various third parties for the
use of their technology, services and data and employee-related costs such as salaries and benefits.

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 certain third-party fees.

43

Research and Development

Research and development expenses consist primarily of salaries and related expenses, including stock-

based expenses and allocated overhead.

Marketing and Sales

Marketing and sales expenses are our largest cost and consist primarily of salaries and related expenses,

including stock-based expenses and commissions, for our sales and marketing staff, as well as payments to
partners, marketing programs and allocated overhead. Marketing programs consist of advertising, events,
corporate communications, brand building and product marketing activities.

General and Administrative

General and administrative expenses consist primarily of salaries and related expenses, including stock-
based expenses, for finance and accounting, legal, internal audit, human resources and management information
systems personnel and professional services fees.

Critical Accounting Policies and 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 Note 1 “Summary of Business
and Significant Accounting Policies” to our consolidated financial statements, the following accounting policies
and specific estimates involve a greater degree of judgment and complexity.

Revenue Recognition - Contracts with Multiple Performance Obligations. We enter into contracts with our

customers that may include promises to transfer multiple Cloud Services, software licenses, premium support and
professional services. A performance obligation is a promise in a contract with a customer to transfer products or
services that are distinct. Determining whether products and services are distinct performance obligations that
should be accounted for separately or combined as one unit of accounting may require significant judgment.

Cloud Services and software licenses are distinct as such offerings are often sold separately. In determining

whether professional services are distinct, 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 start date and the
contractual dependence of the service on the customer’s satisfaction with the professional services work. To date,
we have concluded that professional services included in contracts with multiple performance obligations are
generally distinct.

We allocate the transaction price to each performance obligation on a relative standalone selling price

(“SSP”) basis. The SSP is the price at which we would sell a promised product or service separately to a
customer. Judgment is required to determine the SSP for each distinct performance obligation. We determine
SSP 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 services are sold, price lists, our go-to-market strategy, historical sales
and contract prices. In instances where we do not sell or price a product or service separately, we determine
relative fair value using information that may include market conditions or other observable inputs. As our
go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes
to SSP.

44

In certain cases, we are able to establish SSP based on observable prices of products or services sold
separately in comparable circumstances to similar customers. We use a single amount to estimate SSP when it
has observable prices. If SSP is not directly observable, for example when pricing is highly variable, we use a
range of SSP. We determine the SSP range using information that may include pricing practices or other
observable inputs. We typically have more than one SSP for individual products and services due to the
stratification of those products and services by customer size and geography.

Costs Capitalized to Obtain Revenue Contracts. Costs capitalized related to new revenue contracts are
amortized on a straight-line basis over four years, which, although longer than the typical initial contract period,
reflects the average period of benefit, including expected contract renewals. Significant judgment is required in
arriving at this average period of benefit. Therefore, we evaluate both qualitative and quantitative factors which
include the estimated life cycles of our offerings and our customer attrition.

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 as
well as the useful lives of those acquired intangible assets.

Examples of critical estimates in valuing certain of the intangible assets and goodwill we have acquired

include but are not limited to:

•

•

•

•

•

•

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

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

discount rates;

uncertain tax positions and tax related valuation allowances assumed;

fair value of assumed equity awards; and

fair value of pre-existing relationships.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such

assumptions, estimates or actual results.

Income Taxes. 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 gains, within the carryback or
carryforward periods available under the applicable tax law. We regularly review the deferred tax assets for
recoverability based on historical taxable income, projected future taxable income, the expected timing of the
reversals of existing temporary differences and tax planning strategies. Our judgment regarding future
profitability may change due to many factors, including future market conditions and the ability to successfully
execute our business plans and tax planning strategies. Should there be a change in the ability to recover deferred
tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We

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

45

Strategic Investments. Accounting for strategic investments in privately held debt and equity securities in

which we do not have a controlling interest or significant influence requires us to make significant estimates and
assumptions.

Valuations of privately held securities are inherently complex due to the lack of readily available market

data and require the use of judgment. Privately held debt and equity securities are valued using significant
unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of
market prices and inherent lack of liquidity. The carrying value is adjusted for our privately held equity securities
if there are observable price changes in a same or similar security from the same issuer or if there are identified
events or changes in circumstances that may indicate impairment, as discussed below. In determining the
estimated fair value of our strategic investments in privately held companies, we utilize the most recent data
available. The determination of whether an orderly transaction is for a same or similar investment requires
significant management judgment including the nature of rights and obligations of the investments, the extent to
which differences in those rights and obligations would affect the fair values of those investments, and the impact
of any differences based on the stage of operational development of the investee.

We assess our privately held debt and equity securities strategic investment portfolio quarterly for

impairment. Our impairment analysis encompasses an assessment of both qualitative and quantitative analyses of
key factors including the investee’s financial metrics, market acceptance of the product or technology, and the
rate at which the investee is using its cash. If the investment is considered to be impaired, we record the
investment at fair value by recognizing an impairment through the consolidated statement of operations and
establishing a new carrying value for the investment.

46

Results of Operations

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

Fiscal Year Ended January 31,

% of
Total
Revenues

2019

% of
Total
Revenues

% of
Total
Revenues

2018

2020

Revenues:

Subscription and support
Professional services and other

. . . . . . . . . . . . . . $16,043
1,055

. . . . . . . . .

94% $12,413
869
6

93% $ 9,766
774
7

93%
7

Total revenues . . . . . . . . . . . . . . . . . .

17,098

100

13,282

100

10,540

100

Cost of revenues (1)(2):

Subscription and support
Professional services and other

. . . . . . . . . . . . . .
. . . . . . . . .

Total cost of revenues . . . . . . . . . . . . .

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses (1)(2):

Research and development . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . .
Loss on settlement of Salesforce.org

3,198
1,037

4,235

12,863

2,766
7,930
1,704

reseller agreement . . . . . . . . . . . . . . . . . .

166

Total operating expenses . . . . . . . . . .

12,566

Income from operations . . . . . . . . . . . . . . . . . . .
Gains on strategic investments, net
. . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . .

297
427
(18)

Income before benefit from (provision for)

income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

706

Benefit from (provision for) income

19
6

25

75

16
46
10

1

73

2
2
0

4

taxes (3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(580)

(3)

2,604
847

3,451

9,831

1,886
6,064
1,346

0

9,296

535
542
(94)

983

127

20
6

26

74

14
46
10

0

70

4
4
(1)

7

1

2,033
740

2,773

7,767

1,553
4,671
1,089

0

7,313

454
19
(53)

420

(60)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

126

1% $ 1,110

8% $

360

19
7

26

74

15
44
10

0

69

5
0
(1)

4

(1)

3%

(1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in

millions):

Fiscal Year Ended January 31,

% of
Total
Revenues

% of
Total
Revenues

% of
Total
Revenues

2018

2019

2020

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $440
352
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3% $215
232
2%

2% $166
121
2

2%
1

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

Fiscal Year Ended January 31,

% of
Total
Revenues

% of
Total
Revenues

2019

2020

% of
Total
Revenues

2018

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $204
510
. . . . . . . . . . . . . . . . . . . . . . . .
Research and development
852
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
219
General and administrative . . . . . . . . . . . . . . . . . . . . . . . .

1% $161
307
3
643
5
172
1

1% $130
260
2
469
5
138
1

1%
2
5
1

47

(3) Amounts include a benefit related to the partial release of the valuation allowance of $612 million, and

$2 million, for fiscal 2019 and 2018, respectively. The fiscal 2019 benefit was partially offset by an increase
in unrecognized tax benefits.

The following table sets forth selected balance sheet data and other metrics for each of the periods indicated

(in millions, except remaining performance obligation, which is presented in billions):

Cash, cash equivalents and marketable securities . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining performance obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal due on our outstanding debt obligations (1) . . . . . . . . . . . . . .

(1) Amounts do not include operating or financing lease obligations.

As of January 31,

2020

2019

$ 7,947
10,662
30.8
2,694

$4,342
8,564
25.7
3,198

Remaining performance obligation represents contracted revenue that has not yet been recognized, which

includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.

Impact of Acquisitions

The comparability of our operating results for the fiscal year ended January, 31 2020 compared to the fiscal

year ended January 31, 2019 was impacted by our recent business combination and acquisitions, including the
acquisition of Tableau in August 2019, which has been our largest acquisition to date. In our discussion of
changes in our results of operations for fiscal 2020 compared to fiscal 2019, we may quantitatively disclose the
impact of our acquired products and services for the one-year period subsequent to the acquisition date on the
growth in certain of our revenues where such discussions would be meaningful. Expense contributions from our
recent acquisitions for each of the respective period comparisons generally were not separately identifiable due to
the integration of these businesses into our existing operations or were insignificant to our results of operations
during the periods presented.

Fiscal Year Ended January 31, 2020 and 2019

Revenues.

(in millions)

Fiscal Year Ended
January 31,

Variance

2020

2019

Dollars

Percent

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . .
Professional services and other . . . . . . . . . . . . . . . . . . . .

$16,043
1,055

$12,413
869

$3,630
186

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,098

$13,282

$3,816

29%
21

29

The increase in subscription and support revenues was primarily caused by volume-driven increases from
new business, which includes new customers, upgrades, additional subscriptions from existing customers and
acquisition activity. Pricing was not a significant driver of the increase in revenues for the period. Revenues from
term and perpetual software licenses, which are recognized at a point in time, represent approximately five
percent of total subscription and support revenues for fiscal 2020. Subscription and support revenues accounted
for approximately 94 percent and 93 percent of our total revenues for fiscal 2020 and fiscal 2019, respectively.

The business combination with Salesforce.org in June 2019 and acquisition of Tableau in August 2019
contributed approximately $217 million and $652 million to total subscription and support revenues in fiscal
2020, respectively. In addition, total revenues for fiscal 2020 benefited from a full twelve months of revenue
from the acquisition of MuleSoft in May 2018. As a result of our business combination activity, we recorded

48

unearned revenue related to acquired contracts from acquired entities at fair value on the date of acquisition. As a
result, we did not recognize certain revenues related to these acquired contracts that the acquired entities would
have otherwise recorded as an independent entity.

Our growth in revenues is also impacted by attrition. Attrition represents the reduction or loss of the
annualized value of our contracts with customers. We calculate our attrition rate at a point in time on a trailing
twelve month basis as of the end of each month. As of January 31, 2020, our attrition rate, excluding Commerce
Cloud, Integration Cloud, Salesforce.org and Tableau, was less than nine percent. Our attrition rate for fiscal
2020 benefited, in part, from the ongoing shift in our business mix to enterprise and international markets which
have longer customer contract term durations. In general, we exclude service offerings from acquisitions from
our attrition calculation until fully integrated into our customer success organization. While it is difficult to
predict, 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 continue to invest in a variety of customer programs and initiatives which, along with increasing

enterprise adoption, have helped keep our attrition rate consistent as compared to the prior year. Consistent
attrition rates play a role in our ability to maintain growth in our subscription and support revenues. The increase
in professional services and other revenues was due primarily to the higher demand for services from an
increased number of customers.

Subscription and Support Revenue by Service Offering

Subscription and support revenues consisted of the following (in millions):

Sales Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salesforce Platform and Other . . . . . . . . . . . . . . . . . . . . .
Marketing and Commerce Cloud . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended
January 31,

2020

2019

$ 4,598
4,466
4,473
2,506

$ 4,040
3,621
2,854
1,898

Variance
Percent

14%
23%
57%
32%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,043

$12,413

Subscription and support revenues from Quip Collaboration Platform were not significant in fiscal 2020 and
2019. Our Industry Offerings revenue is included in either Sales Cloud, Service Cloud or Salesforce Platform and
Other depending on the primary service offering purchased. Integration and Analytics revenues are included in
Salesforce Platform and Other. The acquisition of Tableau in August 2019 contributed approximately
$652 million to Salesforce Platform and Other.

Revenues by geography were as follows:

(in millions)

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2020

$12,051
3,430
1,617

$17,098

49

Fiscal Year Ended January 31,

As a % of
Total
Revenues

2019

71% $ 9,445
2,553
20
1,284
9

As a % of
Total
Revenues

71%
19
10

Growth
Rate

28%
34
26

100% $13,282

100%

Revenues by geography are determined based on the region of the Salesforce contracting entity, which may

be different than the region of the customer. 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 investment in
additional international resources. Revenues in the Americas and Europe also benefited from our acquisition of
Tableau in August 2019. Foreign currency fluctuations, primarily the strengthening British Pound Sterling, had a
negative impact on revenues outside of the Americas of approximately $91 million in fiscal 2020 compared to a
positive impact of approximately $39 million in fiscal 2019.

Cost of Revenues.

(in millions)

Fiscal Year Ended
January 31,

2020

2019

Subscription and support
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional services and other . . . . . . . . . . . . . . . . . . . . . . .

$3,198
1,037

$2,604
847

Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,235

$3,451

Percent of total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25%

26%

Variance
Dollars

$594
190

$784

For fiscal 2020, the increase in cost of revenues was primarily due to an increase of $245 million in

employee-related costs, an increase of $43 million in stock-based expenses, an increase of $213 million in
service delivery costs, primarily due to our efforts to increase data center capacity and an increase of
amortization of purchased intangible assets of $225 million. Service delivery costs associated with perpetual and
term software licenses is lower than our service delivery costs for our cloud service offerings and as a result, our
subscription and support gross margin in fiscal 2020 benefited, in part, due to this shift in our business mix.

We have increased our headcount by 30 percent since fiscal 2019 to meet the higher demand for services
from our customers, and our recent acquisitions also contributed to this increase. We intend to continue to invest
additional resources in our enterprise cloud computing services and data center capacity to allow us to scale with
our customers and continuously evolve our security measures. We also plan to add 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.

Our professional services and other gross margin was positive $18 million during fiscal 2020 and positive

$22 million during fiscal 2019. We expect the cost of professional services to be approximately in line with
revenues from professional services in future fiscal quarters. We believe that this investment in professional
services facilitates the adoption of our service offerings.

Operating Expenses.

(in millions)

Fiscal Year Ended
January 31,

2020

2019

Research and development . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . .
. .
Loss on settlement of salesforce.org reseller agreement

$ 2,766
7,930
1,704
166

$1,886
6,064
1,346
0

Variance
Dollars

$ 880
1,866
358
166

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,566

$9,296

$3,270

Percent of total revenues . . . . . . . . . . . . . . . . . . . . . . . . . .

73%

70%

For fiscal 2020, the increase in research and development expenses was primarily due to an increase of
approximately $561 million in employee-related costs, an increase of $203 million in stock-based expenses, an

50

increase in our development and test data center costs and allocated overhead. Our research and development
headcount increased by 54 percent since fiscal 2019 in order to improve and extend our service offerings,
develop new technologies, and integrate acquired companies. Our recent acquisitions also contributed to this
increase in headcount. 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.

For fiscal 2020, the increase in marketing and sales expenses was primarily due to an increase of

$1.1 billion in employee-related costs and amortization of deferred commissions, an increase of $209 million in
stock-based expenses, an increase in amortization of purchased intangible assets of $120 million, and allocated
overhead. Our marketing and sales headcount increased by 36 percent since fiscal 2019, primarily attributable to
hiring additional sales personnel to focus on adding new customers and increasing penetration within our existing
customer base. Our recent acquisitions also contributed to this increase in headcount. We expect that marketing
and sales expenses will increase in absolute dollars and may increase as a percentage of revenues in future
periods as we continue to hire additional sales personnel.

For fiscal 2020, the increase in general and administrative expenses was primarily due to an increase in

employee-related costs. Our general and administrative headcount increased by 38 percent since fiscal 2019 as
we added personnel to support our growth, and our recent acquisitions also contributed to this increase. We also
incurred transaction costs associated with our various acquisitions during fiscal 2020, including approximately
$40 million from Tableau. During fiscal 2019, we incurred approximately $24 million of transaction costs from
our acquisition of MuleSoft in May 2019.

As a result of the June 2019 Salesforce.org business combination, the Company effectively settled all
existing agreements between the Company and Salesforce.org and, as part of business combination accounting,
accordingly recorded a one-time, non-cash operating expense charge of approximately $166 million related to the
effective settlement of the reseller agreement.

Other income and expense.

(in millions)

Fiscal Year Ended
January 31,

2020

2019

Gains on strategic investments, net . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$427
(18)

$542
(94)

Variance
Dollars

$(115)
76

Gains on strategic investments, net consists primarily of mark-to-market adjustments related to our publicly

held equity securities, observable price adjustments related to our privately held equity securities and other
adjustments. Net gains recognized during fiscal 2020 were primarily driven by unrealized gains recognized on
privately held equity securities of $208 million and unrealized gains recognized on publicly traded securities of
$138 million. In addition, net gains recognized during fiscal 2020 included gains of approximately $9 million and
$39 million as a result of remeasuring our prior equity interest in MapAnything and ClickSoftware, respectively.
Net gains recognized during fiscal 2019 were primarily driven by unrealized gains recognized on publicly traded
securities of $345 million.

Other expense primarily consists of interest expense on our debt as well as our operating and finance leases

offset by investment income. Interest expense was $131 million and $154 million for fiscal 2020 and 2019,
respectively. Investment income increased $61 million in fiscal 2020 compared to the same periods a year ago
due to higher interest income across our portfolio, which is primarily a result of the larger cash equivalents and
marketable securities balances.

51

Benefit from (provision for) income taxes.

(in millions)

Fiscal Year Ended
January 31,

2020

2019

Variance
Dollars

Benefit from (provision for) income taxes . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(580)

$127

$(707)

82% (13)%

In fiscal 2020, we recognized a tax provision of $580 million on a pretax income of $706 million. Our tax
provision was primarily driven by incremental tax costs associated with the integration of acquired operations
and assets and profitable jurisdictions outside of the United States.

In fiscal 2019, we recognized a tax benefit of $127 million on a pretax income of $983 million. The tax

benefit recognized was primarily due to the release of our valuation allowance related to federal and state
deferred tax assets which was partially offset with the increase in unrecognized tax benefits. In addition, we
recognized tax expense for profitable jurisdictions outside of the United States.

Fiscal Year Ended January 31, 2019 and 2018

For a discussion of the year ended January 31, 2019 compared to the year ended January 31, 2018, please

refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form 10-K for the year ended January 31, 2019.

Liquidity and Capital Resources

At January 31, 2020, our principal sources of liquidity were cash, cash equivalents and marketable securities
totaling $7.9 billion and accounts receivable of $6.2 billion. Our cash, cash equivalents and marketable securities
are comprised primarily of corporate notes and obligations, U.S. treasury securities, U.S. agency obligations,
asset backed securities, foreign government obligations, mortgage backed obligations, covered bonds, time
deposits, money market mutual funds and municipal securities.

As of January 31, 2020, our remaining performance obligation was $30.8 billion. Our remaining

performance obligation represents contracted revenue that has not yet been recognized and includes unearned
revenue, which has been invoiced and is recorded on the balance sheet, and unbilled amounts that are not
recorded on the balance sheet, that will be recognized as revenue in future periods.

We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities

and, if necessary, our borrowing capacity under our revolving loan credit agreement that provides for $1.0 billion
unsecured financing (“Credit Facility”) and unbilled amounts related to contracted non-cancelable subscription
agreements, which is not reflected on the balance sheet, will be sufficient to meet our working capital, capital
expenditure and debt repayment needs over the next 12 months.

In the future, we may enter into arrangements to acquire or invest in complementary businesses, services
and technologies, and intellectual property rights. To facilitate these acquisitions or investments, we may seek
additional equity or debt financing, which may not be available on terms favorable to us or at all, impacting our
ability to complete subsequent acquisitions or investments.

The adoption of the new lease accounting standard, Topic 842, has not impacted the cost of or limited our

borrowing capacity from third party lenders.

52

Cash Flows

For fiscal 2020, 2019 and 2018, our cash flows were as follows (in millions):

Net cash provided by operating activities . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . .

$4,331
(2,980)
164

$3,398
(5,308)
2,010

$2,738
(2,011)
221

Fiscal Year Ended January 31,

2020

2019

2018

Operating Activities

The net cash provided by operating activities during fiscal 2020 was primarily related to net income of
$126 million, adjusted for non-cash items such as $2.1 billion of depreciation and amortization, $1.8 billion of
expenses related to employee stock plans, $0.9 billion of amortization of costs capitalized to obtain revenue
contracts and discrete one-time non-cash adjustments. Cash provided by operating activities in fiscal 2020
benefited from strong growth in the business and early payments from some of our larger customer contracts,
offset by transaction and integration costs in connection with the acquisition of Tableau.

The net cash provided by operating activities during fiscal 2019 was primarily related to net income of

$1.1 billion, adjusted for non-cash items such as $1.3 billion of expenses related to employee stock plans and
$1.0 billion related to depreciation and amortization.

Investing Activities

The net cash used in investing activities during fiscal 2020 was primarily related to the purchases of

marketable securities of $3.9 billion and was offset by sales and maturities of marketable securities
of $2.2 billion. In addition, we paid approximately $1.1 billion of cash consideration for business combinations
during fiscal 2020, which was offset by approximately $644 million of cash and cash equivalents acquired in
connection with the acquisition of Tableau, as well as approximately $110 million of cash and cash equivalents
acquired in connection with other acquisitions.

The net cash used in investing activities during fiscal 2019 was primarily related to the acquisition of
MuleSoft, Datorama and CloudCraze for $5.1 billion and was offset by sales and maturities of marketable
securities of $1.6 billion.

Financing Activities

Net cash provided by financing activities during fiscal 2020 consisted primarily of $840 million from
proceeds from equity plans offset by repayments of debt of $503 million, including repayment of the 2021 Term
Loan, and principal payments on financing obligations of $173 million.

Net cash provided by financing activities during fiscal 2019 consisted primarily of $3.0 billion from
proceeds from issuance of debt to fund the acquisition of MuleSoft and $704 million from proceeds from equity
plans offset by $1.5 billion in repayments of debt.

Debt

As of January 31, 2020, we had senior unsecured debt outstanding due in 2023 and 2028 with a total
carrying value of $2.5 billion. In addition, we had senior secured notes outstanding related to our loan on 50
Fremont due in 2023 with a total carrying value of $193 million. We were in compliance with all debt covenants
as of January 31, 2020.

53

We maintain a Credit Facility that matures in April 2023. We may use the proceeds of future borrowings

under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures and other
general corporate purposes, including permitted acquisitions. There were no outstanding borrowings under the
Credit Facility as of January 31, 2020.

We do not have any special purpose entities and we do not engage in off-balance sheet financing

arrangements.

Contractual Obligations

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, excluding all secured and unsecured debt. At January 31, 2020, the future non-cancelable minimum
payments under these commitments were as follows (in millions):

Operating lease obligations:

Facilities space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment and furniture and

fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease obligation—buildings to be constructed . . . . . . . . . .
2023 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan assumed on 50 Fremont . . . . . . . . . . . . . . . . . . . . . . . .
Contractual commitments . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments Due by Period

Total

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years

$ 3,226

$ 493

$ 913

$ 700

$1,120

587
571
2,142
1,000
1,500
194
2,522

356
67
1
0
0
4
398

231
46
79
0
0
8
1,069

0
48
266
1,000
0
182
839

0
410
1,796
0
1,500
0
216

$11,742

$1,319

$2,346

$3,035

$5,042

Purchase orders are not included in the table above. Our purchase orders represent authorizations to

purchase rather than binding agreements. The contractual commitment amounts in the table above are associated
with agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or
minimum services to be used; fixed, minimum or variable price provisions; and the approximate timing of the
transaction. Obligations under contracts that we can cancel without a significant penalty are not included in the
table above.

During fiscal 2020 and in future fiscal years, we have made and expect to continue to make additional

investments in our infrastructure to scale our operations, increase productivity and enhance our security
measures. We plan to upgrade or replace various internal systems to scale with our overall growth. 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 such investments and continued office build-outs, other leasehold
improvements and data center investments.

Other Future Obligations

In February 2020, the Company acquired all outstanding stock of a cloud-based real-time personalization

and customer data platform, for approximately $100 million of cash consideration.

In February 2020, the Company made a strategic investment of $150 million in cash for preferred shares of

a technology company in a private placement.

54

In November 2019, we entered into an agreement to purchase two real estate assets in San Francisco,
California for approximately $150 million. The transaction is expected to close in the first quarter of fiscal 2021,
subject to customary closing conditions.

In February 2020, the Company entered into an agreement to acquire Vlocity, Inc., a leading provider of

industry-specific cloud and mobile software for approximately $1.33 billion of cash consideration. The
transaction is expected to close in the second quarter of fiscal 2021, subject to customary closing conditions.

In October 2019, we acquired ClickSoftware for approximately $1.4 billion. In the event that we fully
integrate the operations and assets of ClickSoftware, as well as other acquired Israeli based entities into our
operations, we may be subject to a potential one-time income tax charge based on an assumed Israeli statutory
tax rate of 23 percent applied to the value of any transferred intangibles. Our tax provision for fiscal 2020 reflects
the estimated incremental tax costs associated with the integration of ClickSoftware’s operations and assets. The
timing and amount of the cash payment, if any, is uncertain and would be based upon a number of factors,
including our integration plans, valuations related to intercompany transactions, the tax rate in effect at the time,
potential negotiations with the taxing authorities and potential litigation.

Environmental, Social, Governance

We believe the business of business is to make the world a better place for all of our stakeholders, including

our stockholders, customers, employees, partners, the planet and the communities in which we work and live.
Delivering innovative solutions to our customers is core to our mission and, as a technology company, we have
developed solutions on the Salesforce Platform that enable our customers and stakeholders to manage and affect
environmental, social and governance (“ESG”) matters that are meaningful to them. We also believe that
transparently disclosing the goals and relevant metrics related to our ESG programs will allow our stakeholders
to be informed on our progress. To this end, we are working to align with the recommendations of the Financial
Stability Board’s (“FSB”) Task Force on Climate-Related Financial Disclosures (“TCFD”) and of the
Sustainability Accounting Standards Board (“SASB”) by the end of fiscal 2021.

In fiscal 2020, we completed an ESG materiality assessment, which identified key topics that are most
important to our stakeholders and our success as a business. We expect to update this assessment on a periodic
basis to ensure it reflects changes in our business and the external environment. The topics covered in this section
include some of the key highlights from that assessment. We also publish an annual stakeholder impact report on
our website detailing our overall strategy relating to ESG programs as well as our efforts in these areas.

Environmental

Protecting our Planet: We are committed to creating a sustainable, low-carbon future. Salesforce delivers all
customers a carbon neutral cloud and we are committed to achieving 100 percent renewable energy for our global
operations by the end of fiscal 2022. In fiscal 2020, we procured electricity from renewable energy resources
equivalent to 63 percent of what we used globally. We have set an internal price on carbon by offsetting all of
our Scope 1 and 2 emissions, as well as the parts of our Scope 3 (indirect emissions) related to delivering a
carbon neutral cloud and all employee commuting and business travel emissions. In addition, we had our 1.5
degree science-based target approved by the Science-Based Targets Initiative. This included a supply chain
engagement commitment whereby suppliers representing 60 percent of Salesforce’s Scope 3 emissions, covering
all upstream emission categories, will set science-based targets by 2024.

Salesforce Sustainability Cloud: We believe that our technology can play an important role in helping to drive
climate action that will accelerate the world’s efforts towards carbon neutrality and, in fiscal 2020, we launched
Salesforce Sustainability Cloud, a carbon accounting product for businesses and governments to track and
manage their greenhouse gas emissions.

55

Social

Recruiting and Managing a Global, Diverse and Skilled Workforce: Our culture is driven by our core values
of trust, customer success, innovation and equality. We believe our company culture fosters open dialogue,
collaboration, recognition and a sense of family, all of which allow us to attract and retain the best talent. We
invest in programs designed to enhance employee success and create a safe, healthy and engaging working
environment. Some examples include:

• We review the salaries and bonuses of our global workforce on an annual basis to ensure everyone is
paid equally for equal work and close any unexplained gaps. To date, we have spent $10.3 million
intended to ensure equal pay for equal work. We also review differences in pay for not only gender, but
also race and ethnicity in the United States;

• We aspire to have 50 percent of our U.S. workforce made up of underrepresented groups (Women,

Black, Latinx, Indigenous, Multiracial, Lesbian, Gay, Bi-Sexual, Trans, Queer, People with
Disabilities, and Veterans) by 2023. As of October 31, 2019, 43.9 percent of our U.S. workforce was
made up of underrepresented groups;

• We support 12 employee-led and founded employee resource groups, which provide a community for
underrepresented groups and their allies, offer professional development and mentoring opportunities,
and empower employees to be responsive equality leaders in their community. In fiscal 2020, nearly
half of our employees engaged in one or more such resource groups.

Workforce Development: Salesforce is committed to enabling the workforce to learn the skills needed to thrive
in the jobs of today and tomorrow. Our free online learning platform, Trailhead, allows anyone to learn
in-demand technology and business skills. To date, over 20 million badges have been earned on Trailhead.

Ethical and Humane Use of Technology: We aspire to create technology that not only drives the success of our
customers, but also upholds the basic human rights of every individual. Core to this effort is the establishment of
the Office of Ethical and Humane Use of Technology, working across product, law, policy, and ethics to develop
and implement a strategic framework for the ethical and humane use of technology across Salesforce.

Integrated Philanthropy: We believe that business is the greatest platform for change. Together with the
Salesforce Foundation, a 501(c)(3) nonprofit organization, to date we have given approximately $330 million to
charitable organizations, logged more than 4.9 million employee volunteer hours around the world and provided
more than 46,000 nonprofit and higher education organizations with the use of our service offerings for free or at
a discount.

Philanthropy Cloud: Philanthropy Cloud is an end-to-end solution for our customers employees’ philanthropy
needs, including donations, volunteering, grants management, and pledge processing.

Governance:

Data Security: Customers entrust us with their most sensitive data, and they expect us to protect it using security
risk management practices and advanced systems that respond to the changing security landscape and emerging
threats. We have made and will continue to make substantial investments in our cybersecurity programs. We
provide an overview of our program, training, best practices for our customers, and information on system status,
security issues, and compliance certificates on our website at www.trust.salesforce.com. In addition, we believe
that improvements in data security are critical to realizing the potential of technology and greater connectivity to
improve lives around the world and that effective cybersecurity requires an ecosystem-wide approach. This is
why we work with partners and stakeholders across the globe to support legislation and initiatives such as the
Cybersecurity Tech Accord that would help modernize how we approach cybersecurity as an industry.

Data Privacy: Our customers trust us to help them build meaningful relationships with their own customers. The
privacy of the data that we are entrusted to protect is a top priority. Our customer agreements (templates of which

56

are publicly available on our website) and our privacy policies (also publicly available on our website) describe
how we safeguard data with an effective privacy and security program. We also offer resources to help our
customers operate globally in compliance with privacy laws such as GDPR and CCPA.

Corporate Governance: We are committed to a corporate governance structure that promotes long-term
stockholder value creation by providing a leadership structure and composition of the Board of Directors that is
aligned with our strategic direction and providing our stockholders with both the opportunity to provide direct
feedback and key substantive rights to ensure accountability. Governance is foundational to our ESG programs
and we work actively with our Board of Directors on our initiatives. For example, our Audit and Finance
Committee oversees cybersecurity matters and meets regularly with our Chief Trust Officer, and our Nominating
and Corporate Governance Committee oversees our ESG programs as set forth in its charter. The Privacy and
Ethical Use Committee, comprised of independent directors, also oversees our privacy matters and meets
regularly with our Office of Ethical and Humane Use of Technology.

Our annual proxy statement, available on the Investor Relations website, https://investor.salesforce.com, or
www.sec.gov, provides additional details on our corporate governance practices, including our board
composition.

57

ITEM 7A. 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, costs associated with third-party infrastructure providers,
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 (“USD”). 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.

Our European revenue, operating expenses and significant balance sheet accounts denominated in currencies

other than the USD primarily flow through our United Kingdom (“UK”) subsidiary, which has a functional
currency of the British Pound Sterling. This results in a two-step currency exchange process wherein the
currencies in Europe other than the British Pound Sterling are first remeasured into the British Pound Sterling
and then the British Pound Sterling is translated into USD for our Consolidated Financial Statements. As an
example, costs incurred in France are remeasured from the Euro to the British Pound Sterling and then translated
into the USD. Our statements of operations and balance sheet accounts are also impacted by the re-measurement
of non-functional currency transactions such as USD denominated intercompany loans, cash accounts held by our
overseas subsidiaries, accounts receivable denominated in foreign currencies and unearned revenue and accounts
payable denominated in foreign currencies.

In fiscal 2020, we began transitioning away from this UK-centralized European structure to enable some of

our local subsidiaries within Europe, including Germany and France, to invoice customers directly. This
transition, which may take multiple years, would thereby enable the local subsidiaries to recognize revenues,
operating expenses and corresponding balance sheet accounts in local currencies. With the change to local
invoicing in some markets, we expect better alignment between our revenue and expenses in the local currency.

In January 2020, the UK exited the European Union (“EU”) (“Brexit”) and entered a transition period
expected to last until the end of calendar 2020 during which the UK will continue to be subject to EU rules and
regulations while it negotiates the future terms of its relationship with the EU. Brexit, and the outcome of these
ongoing negotiations, could adversely affect the UK, regional (including European) and worldwide economic and
market conditions and could contribute to instability in global financial and foreign exchange markets, including
volatility in the value of the British Pound Sterling and Euro. We have evaluated and started to implement
initiatives, such as the commitment to invest resources in Dublin, Ireland that could partially mitigate the impact
Brexit could have on our operations. In fiscal 2020, 2019 and 2018 total revenues generated in Europe were
approximately 20 percent, 19 percent and 18 percent of total revenues, respectively, of which substantially all
were recorded in our UK subsidiary. Revenues in Europe were negatively impacted by approximately
$79 million in fiscal 2020 compared to fiscal 2019 as a result of the strengthening British Pound Sterling. We
recognize that there are still significant uncertainties surrounding the ultimate resolution of Brexit negotiations,
and we will continue to monitor any changes that may arise and assess their potential impact on our business.

Foreign Currency Transaction Risk

Our foreign currency exposures typically arise from selling annual and multi-year subscriptions in multiple

currencies, customer accounts receivable, 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.

58

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 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 sheets with changes in fair values recorded to our consolidated statements 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 expenses

and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into USD.
Although the USD fluctuated against certain international currencies over the past several months, the amounts
of revenue and remaining performance obligation that we reported in USD for foreign subsidiaries that transact
in international currencies were similar to what we would have reported during the fiscal year using a constant
currency rate.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $7.9 billion at January 31, 2020. 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
marketable securities are held for general corporate purposes, including 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.

An immediate increase or decrease in interest rates of 100 basis points at January 31, 2020 could result in a
$38 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, 2019, we had cash, cash equivalents and marketable securities totaling $4.3 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 $21 million.

Market Risk and Market Interest Risk

We deposit our cash with multiple financial institutions.

59

In addition, we maintain debt obligations that are subject to market interest risk, as follows (in millions):

Instrument

Maturity date

Principal
Outstanding as of
January 31, 2020

Interest
Terms

Effective interest rate
for fiscal 2020

2023 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . April 2023
2028 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . April 2028
Loan assumed on 50 Fremont . . . . . . . . . . . . . . . .
June 2023
Revolving credit facility . . . . . . . . . . . . . . . . . . . . April 2023

$1,000
1,500
194
0

Fixed
Fixed
Fixed
Floating

3.26%
3.70%
3.75%
N/A

The borrowings under our revolving credit facility (“Credit Facility”) bear interest, at our option, at a base

rate plus a spread of 0.00% to 0.375% or an adjusted LIBOR rate plus a spread of 0.75% to 1.375%, in each case
with such spread being determined based on our credit rating. Our Revolving Credit Facility allows for the
LIBOR rate to be phased-out and replaced with the Secured Overnight Financing Rate and therefore we do not
anticipate a material impact by the expected upcoming LIBOR transition. Regardless of what amounts, if any, are
outstanding under the Credit Facility, we are also obligated to pay an ongoing commitment fee on undrawn
amounts at a rate of 0.05% to 0.175%, with such rate being based on our credit rating, payable in arrears
quarterly. As of January 31, 2020, there was no outstanding borrowing amount under the Credit Facility.

The bank counterparties to our 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 privately held and publicly traded

companies, which range from early-stage companies to more mature companies both domestically and
internationally. We primarily invest in enterprise cloud companies, technology startups and system integrators to
create and expand our ecosystem. As the enterprise cloud computing ecosystem continues to mature and
technologies change, our investment strategy and corresponding investment opportunities have expanded to
include investments in companies concurrently with their initial public offerings, as well as larger capital
investments in late stage companies. We plan to continue these types of strategic investments, including in
companies representing targeted geographies and targeted business and technological initiatives, as opportunities
arise that we find attractive.

As of January 31, 2020, our portfolio consisted of investments in over 260 companies, with capital

investments ranging from less than $0.3 million to approximately $300 million, and 27 investments with carrying
values individually equal to or in excess of approximately $10 million.

The following table sets forth additional information regarding active investments within our strategic

investment portfolio as of January 31, 2020 and excludes exited investments (in millions):

Investment Type

Capital
Invested

Unrealized Gains
(Cumulative)

Unrealized Losses
(Cumulative)

Carrying Value as of
January 31, 2020

Publicly held equity securities . . . . . . . . . . . . . . $ 249
1,288
Privately held equity securities . . . . . . . . . . . . .

Total equity securities . . . . . . . . . . . . . . . . . . . . $1,537

$142
448

$590

$ (21)
(193)

$(214)

$ 370
1,543

$1,913

We anticipate additional volatility to our consolidated statements of operations due to changes in market
prices, observable price changes and impairments to our investments. These changes could be material based on

60

market conditions and events. While historically our investment portfolio has had a positive impact on our
financial results, that may not be true for future periods, particularly in periods of significant market fluctuations
that affect our equity securities within our strategic investments portfolio.

Our investments in privately held securities are in various classes of equity which may have different rights

and preferences. The particular securities we hold, and their rights and preferences relative to those of other
securities within the capital structure, may impact the magnitude by which our investment value moves in
relation to movement of the total company value. As such, our investment value in a specific company may move
by more or less than any change in value of that overall company. For example, an immediate decrease of ten
percent in enterprise value of our significant publicly traded and privately held equity securities held as of
January 31, 2020, which represents 65% of the strategic investment portfolio, could result in a $97 million
reduction to the investment portfolio. Fluctuations in the value of our privately held equity investments are only
recorded when there is an observable transaction for a same or similar investment of the same issuer or in the
event of impairment.

We continually evaluate our investments in privately held and publicly traded companies. In certain cases,

our ability to sell these investments may be impacted by contractual obligations to hold the securities for a set
period of time after a public offering. Currently, two of our five publicly held investments are subject to such a
contractual obligation, which expire in the first quarter of fiscal 2021.

In addition, 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. All of our investments, particularly those in privately held companies, are therefore subject
to a risk of partial or total loss of invested capital.

61

ITEM 8. FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The following financial statements are filed as part of this Annual Report on Form 10-K:

Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page No.

63

68

69

70

71

72

74

62

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of salesforce.com, inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of salesforce.com, inc. (the Company) as of

January 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income,
stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2020, and the
related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company at January 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended January 31, 2020, in conformity with U.S. generally
accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2020, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated March 5, 2020 expressed an
unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 1 to the financial statements, the Company changed its method for accounting for

leases using the modified retrospective approach at the beginning of the year ended January 31, 2020.
Additionally, as discussed in Note 1 to the financial statements, the Company changed its method of accounting
on a prospective basis for privately held equity securities and on a modified retrospective basis for publicly held
equity investments, in the year ended January 31, 2019.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to

express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
financial statements that were communicated or required to be communicated to the audit committee and that:
(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.

63

Revenue Recognition

Description of
the Matter

As described in Note 1 to the financial statements, the Company recognizes revenue upon
transfer of control of promised products and services to customers in an amount that reflects the
consideration the Company expects to receive in exchange for those products or services.

The Company enters into contracts with its customers that may include promises to transfer
multiple cloud services, software licenses, premium support and professional services.
Significant judgment may be required by the Company in determining revenue recognition for
these customer agreements, including the determination of whether products and services are
considered distinct performance obligations that should be accounted for separately or
combined as one unit of accounting and the determination of standalone selling prices for each
distinct performance obligation, particularly for products and services that are not sold
separately.

Given these factors, the related audit effort in evaluating management’s judgments in
determining revenue recognition for these customer agreements was extensive and required a
high degree of auditor judgment.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company’s process to identify performance obligations and allocate the
transaction price to those performance obligations, including controls over determining
standalone selling price.

To test revenue recognized, we obtained an understanding of the Company’s various product
and service offerings and evaluated management’s application of the revenue recognition
accounting requirements to determine which product and service offerings were distinct. We
read executed contracts for a sample of sales transactions to assess management’s evaluation of
significant terms, including the determination of distinct performance obligations, and tested the
amounts recognized as revenue or recorded in unearned revenue. To test management’s
determination of relative standalone selling price for performance obligations, we performed
audit procedures that included, among others, assessing the appropriateness of the methodology
applied, testing mathematical accuracy of the underlying data and calculations, and testing
selections to corroborate the data underlying the Company’s calculations. We also assessed the
appropriateness of the related disclosures in the financial statements.

64

Description of
the Matter

Accounting for Business Combinations

As described in Note 7 to the financial statements, the Company completed several acquisitions
during fiscal year 2020 for aggregate net consideration of over $16 billion. The most significant
of these was the acquisition of Tableau Software, Inc. for total consideration of $14.8 billion. In
connection with these acquisitions, management recognized customer relationship and
developed technology intangible assets of $3.6 billion. The valuation of the customer
relationship and developed technology intangible assets is complex and judgmental due to the
use of subjective assumptions in the valuation models used by management when determining
their estimated fair value. In particular, the fair value estimates for the acquired assets are
sensitive to changes in assumptions for revenue growth, gross margin and operating expenses as
a percentage of revenue.

Auditing management’s valuation of these customer relationship and developed technology
intangibles is complex due to the auditor judgment required to evaluate management’s
assumptions used in determining the fair value of these assets.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the determination of the fair value of customer relationship and developed
technology intangible assets. This included controls over management’s development of the
above described assumptions used in the valuation models applied.

To test the estimated fair value of the customer relationship and developed technology
intangible assets, we performed audit procedures that included, among others, testing the
significant assumptions used in the valuation model, including validating the completeness and
accuracy of the underlying data supporting the assumptions and estimates. We performed
sensitivity analyses to evaluate the changes in the fair value of the assets that would result from
changes in the assumptions and compared the more sensitive significant assumptions used by
management to current industry and competitor data and the Company’s own historical results.
We also assessed the historical accuracy of management’s estimates for previous acquisitions.
In addition, we involved a valuation specialist to assist in our evaluation of the methodology
used by the Company and the significant assumptions underlying the fair value estimates.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Redwood City, California
March 5, 2020

65

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of salesforce.com, inc.

Opinion on Internal Control over Financial Reporting

We have audited salesforce.com, inc.’s internal control over financial reporting as of January 31, 2020,
based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
salesforce.com, inc. (the Company) maintained, in all material respects, effective internal control over financial
reporting as of January 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did
not include the internal controls of Tableau Software, Inc., ClickSoftware Technologies, Ltd. and Salesforce.org,
which are included in the January 31, 2020 consolidated financial statements of the Company and constituted
three percent and one percent of total and net assets, respectively, as of January 31, 2020 and six percent and
twenty three percent of revenues and net income, respectively, for the year then ended. Our audit of internal
control over financial reporting of the Company also did not include an evaluation of the internal control over
financial reporting of Tableau Software, Inc., ClickSoftware Technologies, Ltd. and Salesforce.org.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2020 and 2019, and
the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for
each of the three years in the period ended January 31, 2020, and the related notes and financial statement
schedule listed in the Index at Item 15(a)2, and our report dated March 5, 2020 expressed an unqualified opinion
thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk

that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting

66

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Redwood City, California
March 5, 2020

67

salesforce.com, inc.

Consolidated Balance Sheets
(in millions)

January 31,
2020

January 31,
2019

Assets
Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs capitalized to obtain revenue contracts, net
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs capitalized to obtain revenue contracts, noncurrent, net . . . . . . . . . . . . . . . . . . . . . .
Strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets acquired through business combinations, net . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized software and other assets, net

$ 4,145
3,802
6,174
926
916

15,963
2,375
3,040
1,348
1,963
25,134
4,724
579

$ 2,669
1,673
4,924
788
629

10,683
2,051
0
1,232
1,302
12,851
1,923
695

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$55,126

$30,737

Liabilities and stockholders’ equity
Current liabilities:

Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, current (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,433
750
10,662

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent operating lease liabilities (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,845
2,673
2,445
1,278

21,241

$ 2,691
0
8,564

11,255
3,173
0
704

15,132

Commitments and contingencies (See Notes 13 and 15)
Stockholders’ equity:

Preferred stock, $0.001 par value; 5 shares authorized and none issued and

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.001 par value; 1,600 shares authorized, 893 and 770 issued and
outstanding at January 31, 2020 and 2019, respectively . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0

0

1
32,116
(93)
1,861

1
13,927
(58)
1,735

15,605

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33,885

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$55,126

$30,737

See accompanying Notes.

68

salesforce.com, inc.

Consolidated Statements of Operations
(in millions, except per share data)

Fiscal Year Ended January 31,

2020

2019

2018

Revenues:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscription and support
Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,043
1,055
17,098

$12,413
869
13,282

$ 9,766
774
10,540

Cost of revenues (1)(2):

Subscription and support
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses (1)(2):

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . .
Loss on settlement of Salesforce.org reseller agreement (Note 7)
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on strategic investments, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before benefit from (provision for) income taxes . . . . . . . . . . . . . . . . . . . .
Benefit from (provision for) income taxes (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Basic net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares used in computing basic net income per share . . . . . . . . . . . . . . . . . . . . . . .
Shares used in computing diluted net income per share . . . . . . . . . . . . . . . . . . . . .

3,198
1,037
4,235
12,863

2,766
7,930
1,704
166
12,566
297
427
(18)
706
(580)
126

2,604
847
3,451
9,831

1,886
6,064
1,346
0
9,296
535
542
(94)
983
127
$ 1,110

$
$

0.15
0.15
829
850

1.48
1.43
751
775

$

$
$

2,033
740
2,773
7,767

1,553
4,671
1,089
0
7,313
454
19
(53)
420
(60)
360

0.50
0.49
715
735

$

$
$

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

440
352

$

215
232

166
121

Fiscal Year Ended January 31,

2020

2019

2018

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

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

204
510
852
219

$

$

161
307
643
172

130
260
469
138

(3) Amounts include a benefit related to the partial release of the valuation allowance of $612 million, and

$2 million, for fiscal 2019 and 2018, respectively. The fiscal 2019 benefit was partially offset by an increase
in unrecognized tax benefits.

Fiscal Year Ended January 31,

2020

2019

2018

See accompanying Notes.

69

salesforce.com, inc.

Consolidated Statements of Comprehensive Income
(in millions)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of reclassification adjustments:

Foreign currency translation and other gains (losses) . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on marketable securities and privately held debt

securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss), before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effect

Other comprehensive income (loss), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

2019

2018

$126

$1,110

$360

(59)

26

(33)
(2)

(35)

(26)

(12)

(38)
(1)

(39)

77

(4)

73
1

74

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 91

$1,071

$434

See accompanying Notes.

70

salesforce.com, inc.

Consolidated Statements of Stockholders’ Equity
(in millions)

Common Stock

Shares Amount

707
23

$1
0

Additional
Paid-in
Capital

$ 8,040
709

Accumulated
Other
Comprehensive
Loss

$(86)
0

Retained
Earnings

$ 275
0

Total
Stockholders’
Equity

$ 8,230
709

Balance at January 31, 2017 . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . .
Shares issued related to business

combinations . . . . . . . . . . . . . . . . . .

Temporary equity reclassifications

related to convertible notes . . . . . . .
Stock-based expenses . . . . . . . . . . . . .
Other comprehensive income, net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . .

0

0
0

0
0

Balance at January 31, 2018 . . . . . . . . . . . .
Cumulative effect of accounting

730

changes . . . . . . . . . . . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . .
Shares issued related to business

combinations . . . . . . . . . . . . . . . . . .

Settlement of convertible notes and

warrants . . . . . . . . . . . . . . . . . . . . . .
Stock-based expenses . . . . . . . . . . . . .
Other comprehensive loss, net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . .

Balance at January 31, 2019 . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . .
Shares issued related to business

combinations . . . . . . . . . . . . . . . . . .
Stock-based expenses . . . . . . . . . . . . .
Other comprehensive loss, net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . .

0
21

13

6
0

0
0

770
21

102
0

0
0

0

0
0

0
0

1

0
0

0

0
0

0
0

1
0

0
0

0
0

12

(4)
995

0
0

9,752

0
695

2,195

4
1,281

0
0

13,927
816

15,588
1,785

0
0

0

0
0

74
0

(12)

(7)
0

0

0
0

(39)
0

(58)
0

0
0

(35)
0

$(93)

0

0
0

0
360

635

(10)
0

0

0
0

0
1,110

1,735
0

0
0

0
126

12

(4)
995

74
360

10,376

(17)
695

2,195

4
1,281

(39)
1,110

15,605
816

15,588
1,785

(35)
126

$1,861

$33,885

Balance at January 31, 2020 . . . . . . . . . . . .

893

$1

$32,116

See accompanying Notes.

71

salesforce.com, inc.

Consolidated Statements of Cash Flows
(in millions)

Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of costs capitalized to obtain revenue contracts, net . . . . . . . . . .
Expenses related to employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on settlement of Salesforce.org reseller agreement (Note 7)
. . . . . . . . . .
Gains on strategic investments, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities, net of business combinations:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net
Costs capitalized to obtain revenue contracts, net . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets and other assets . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

2019

2018

$

126

$ 1,110

$

360

2,135
876
1,785
166
(427)

(1,000)
(1,130)
(119)
15
967
(728)
1,665

982
737
1,283
0
(542)

(923)
(981)
(58)
74
213
0
1,503

784
592
997
0
(19)

(719)
(1,156)
18
(39)
392
0
1,528

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . .

4,331

3,398

2,738

Investing activities:
Business combinations, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(369)
(768)
434
(3,857)
1,444
779
(643)

(5,115)
(362)
260
(1,068)
1,426
146
(595)

(25)
(216)
131
(2,003)
558
78
(534)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,980)

(5,308)

(2,011)

Financing activities:
Proceeds from issuance of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payments on financing obligations (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0
840
(173)
(503)

164

(39)

Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . .

1,476
2,669

2,966
704
(131)
(1,529)

2,010

26

126
2,543

0
650
(106)
(323)

221

(12)

936
1,607

Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,145

$ 2,669 $ 2,543

(1) Previously referred to as principal payments on capital lease obligations.

See accompanying Notes.

72

salesforce.com, inc.

Consolidated Statements of Cash Flows

Supplemental Cash Flow Disclosure
(in millions)

Fiscal Year Ended January 31,

2020

2019

2018

Supplemental cash flow disclosure:
Cash paid during the period for:

Interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, net of tax refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-cash investing and financing activities:

Fair value of equity awards assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of common stock issued as consideration for business

$
$

$

106
129

$
$

94
83

$40
$53

373

$ 480

$ 0

combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$15,215

$1,715

$12

See accompanying Notes.

73

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 software, delivered through the

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

The Company’s core mission is to empower its customers to connect with their customers in entirely new

ways through cloud, mobile, social, blockchain, voice, advanced analytics and artificial intelligence (“AI”)
technologies. Salesforce’s Customer 360 is an integrated platform that unites sales, service, marketing,
commerce, integration, analytics and more to give companies a single, shared view of their customers.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2020, for example, refer to the fiscal

year ending January 31, 2020.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the

United States (“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 fair value of assets acquired and liabilities assumed for business combinations;

the standalone selling price (“SSP”) of performance obligations for revenue contracts with multiple
performance obligations;

the valuation of privately-held strategic investments;

the recognition, measurement and valuation of current and deferred income taxes and uncertain tax
positions;

the average period of benefit associated with costs capitalized to obtain revenue contracts;

the useful lives of intangible assets; and

the fair value of certain stock awards issued.

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 makers

74

(“CODMs”), in deciding how to allocate resources and assess performance. For fiscal 2020, our CODMs were
Marc Benioff, who is the chief executive officer and the chair of the board, and Keith Block, who served as
co-chief executive officer until February 25, 2020. Over the past few years, the Company has completed a
number of 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, including as a

result of the Company’s acquisitions, and operates in multiple countries, the Company’s business operates in one
operating segment because most of the Company’s offerings operate on its single Customer 360 Platform and
most of the Company’s products are deployed in a nearly identical way, and the Company’s CODMs evaluate the
Company’s financial information and resources and assess 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, Significant Customers and Investments

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of
cash and cash equivalents, marketable securities and accounts receivable. Collateral is not required for accounts
receivable. The Company maintains an allowance for its doubtful accounts receivable. 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. Receivables are written-off and charged against the recorded
allowance when the Company has exhausted collection efforts without success. The Company had an allowance
for doubtful accounts of $23 million and $22 million at January 31, 2020 and 2019, respectively.

No single customer accounted for more than five percent of accounts receivable at January 31, 2020 and
January 31, 2019. No single customer accounted for five percent or more of total revenue during fiscal 2020,
2019 and 2018. As of January 31, 2020 and January 31, 2019, assets located outside the Americas were
12 percent and 14 percent of total assets, respectively. As of January 31, 2020 and January 31, 2019, assets
located in the United States were 87 percent and 84 percent of total assets, respectively.

The Company is also exposed to concentrations of risk in its strategic investment portfolio. As of

January 31, 2020, the Company held five investments with carrying values that were individually greater than
five percent of its total strategic investments, of which one was publicly traded and four were privately held. As
of January 31, 2019, the Company held five investments that were individually greater than five percent of its
total strategic investments, of which four were publicly traded and one was privately held.

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 (collectively,
“Cloud Services”), software licenses, 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 and implementation services. Other revenue consists primarily of training fees.

Revenue is recognized upon transfer of control of promised products and services to customers in an amount

that reflects the consideration the Company expects to receive in exchange for those products or services. If the
consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or
service level penalties, the Company includes an estimate of the amount it expects to receive for the total
transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.

The Company determines the amount of revenue to be recognized through the application of the following

steps:

•

Identification of the contract, or contracts with a customer;

75

•

Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Allocation of the transaction price to the performance obligations in the contract; and

• Recognition of revenue when or as the Company satisfies the performance obligations.

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 comprised of fees that provide customers with access to Cloud

Services, software licenses and related support and updates during the term of the arrangement.

Cloud Services allow customers to use the Company’s multi-tenant software without taking possession of

the software. Revenue is generally recognized ratably over the contract term.

With the May 2018 acquisition of MuleSoft, Inc. (“MuleSoft”) and the August 2019 acquisition of Tableau

Software, Inc. (“Tableau”), subscription and support revenues also includes revenues associated with software
licenses. These licenses for on-premises software provide the customer with a right to use the software as it exists
when made available. Customers purchase these term licenses through a subscription. Revenues from distinct
licenses are generally recognized upfront when the software is made available to the customer. In cases where the
Company allocates revenue to software updates and support revenue is recognized as the updates are provided,
which is generally ratably over the contract term.

The Company typically invoices its customers annually. Typical payment terms provide that customers pay
within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in unearned
revenue or revenue, depending on whether transfer of control to customers has occurred.

Professional Services and Other Revenues

The Company’s professional services contracts are either on a time and materials, fixed fee or subscription

basis. These revenues are recognized as the services are rendered for time and materials contracts, on a
proportional performance basis for fixed price contracts or ratably over the contract term for subscription
professional services contracts. Training revenues are recognized as the services are performed.

Significant Judgments - Contracts with Multiple Performance Obligations

The Company enters into contracts with its customers that may include promises to transfer multiple Cloud
Services, software licenses, premium support and professional services. A performance obligation is a promise in
a contract with a customer to transfer products or services that are distinct. Determining whether products and
services are distinct performance obligations that should be accounted for separately or combined as one unit of
accounting may require significant judgment.

Cloud Services and software licenses are distinct because such offerings are often sold separately. In
determining whether professional services are distinct, 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 start
date and the contractual dependence of the service on the customer’s satisfaction with the professional services
work. To date, the Company has concluded that professional services included in contracts with multiple
performance obligations are generally distinct.

76

The Company allocates the transaction price to each performance obligation on a relative standalone selling

price (“SSP”) basis. The SSP is the price at which the Company would sell a promised product or service
separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation.

The Company determines SSP 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, the Company’s go-to-market strategy, historical sales and contract prices. In instances where the
Company does not sell or price a product or service separately, the Company determines relative fair value using
information that may include market conditions or other observable inputs. As the Company’s go-to-market
strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to
SSP.

In certain cases, the Company is able to establish SSP based on observable prices of products or services

sold or priced separately in comparable circumstances to similar customers. The Company uses a single amount
to estimate SSP when it has observable prices.

If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of

SSP. The Company determines the SSP range using information that may include pricing practices or other
observable inputs. The Company typically has more than one SSP for individual products and services due to the
stratification of those products and services by customer size and geography.

Costs Capitalized to Obtain Revenue Contracts

The Company capitalizes incremental costs of obtaining a non-cancelable subscription and support revenue

contract. The capitalized amounts consist primarily of sales commissions paid to the Company’s direct sales
force. Capitalized amounts also include (1) amounts paid to employees other than the direct sales force who earn
incentive payouts under annual compensation plans that are tied to the value of contracts acquired,
(2) commissions paid to employees upon renewals of subscription and support contracts, (3) the associated
payroll taxes and fringe benefit costs associated with the payments to the Company’s employees, and to a lesser
extent (4) success fees paid to partners in emerging markets where the Company has a limited presence.

Costs capitalized related to new revenue contracts are amortized on a straight-line basis over four years,
which, although longer than the typical initial contract period, reflects the average period of benefit, including
expected contract renewals. In arriving at this average period of benefit, the Company evaluated both qualitative
and quantitative factors which included the estimated life cycles of its offerings and its customer attrition.
Additionally, the Company amortizes capitalized costs for renewals and success fees paid to partners over two
years.

The capitalized amounts are recoverable through future revenue streams under all non-cancelable customer
contracts. The Company periodically evaluates whether there have been any changes in its business, the market
conditions in which it operates or other events which would indicate that its amortization period should be
changed or if there are potential indicators of impairment.

Amortization of capitalized costs to obtain revenue contracts is included in marketing and sales expense in

the accompanying consolidated statements of operations.

During fiscal 2020, the Company capitalized $1.1 billion of costs to obtain revenue contracts and amortized

$0.9 billion to marketing and sales expense. During the same period a year ago, the Company capitalized
$1.0 billion of costs to obtain revenue contracts and amortized $0.7 billion to marketing and sales expense. Costs
capitalized to obtain a revenue contract, net on the Company’s consolidated balance sheets totaled $2.3 billion at
January 31, 2020 and $2.0 billion at January 31, 2019. There were no impairments of costs to obtain revenue
contracts for fiscal 2020, 2019 and 2018, respectively.

77

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

The Company considers all of its marketable debt securities as available for use in current

operations, including those with maturity dates beyond one year, and therefore classifies these securities within
current assets on the consolidated balance sheets. 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 until realized. 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 reduction to investment income. 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. For the purposes of computing realized and unrealized gains and losses, the
cost of securities sold is based on the specific-identification method. Interest on securities classified as available
for sale is included as a component of investment income.

Strategic Investments

The Company holds strategic investments in privately held debt and equity securities and publicly held

equity securities in which the Company does not have a controlling interest or significant influence.

Privately held equity securities are recorded at cost and adjusted for observable transactions for same or
similar investments of the same issuer (referred to as the measurement alternative) or impairment. All gains and
losses on privately held equity securities, realized and unrealized, are recorded through gains on strategic
investments, net on the consolidated statement of operations. Privately held debt securities are recorded at fair
value with changes in fair value recorded through accumulated other comprehensive income on the consolidated
balance sheet.

Valuations of privately held securities are inherently complex due to the lack of readily available market
data and require the Company’s use of judgment. The carrying value is not adjusted for the Company’s privately
held equity securities if there are no observable price changes in a same or similar security from the same issuer
or if there are no identified events or changes in circumstances that may indicate impairment, as discussed below.
In determining the estimated fair value of its strategic investments in privately held companies, the Company
utilizes the most recent data available to the Company. The Company assesses its privately held debt and equity
securities in its strategic investment portfolio at least quarterly for impairment. The Company’s impairment
analysis encompasses an assessment of both qualitative and quantitative factors including the investee’s financial
metrics, market acceptance of the investee’s product or technology and the rate at which the investee is using its
cash. If the investment is considered impaired, the Company recognizes an impairment through the consolidated
statement of operations and establishes a new carrying value for the investment.

Publicly held equity securities are measured at fair value with changes recorded through gains on strategic

investments, net on the consolidated statement of operations.

If, based on the terms of these privately held and publicly traded securities, the Company determines that

the Company exercises significant influence on the entity to which these securities relate, the Company will
apply the equity method of accounting for such investments.

78

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 the Euro, British Pound Sterling, Japanese Yen, Canadian Dollar and
Australian Dollar. 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. The Company generally enters into master netting arrangements with the financial institutions with
which it contracts for such derivative contracts, which permit net settlement of transactions with the same
counterparty, thereby reducing credit-related losses in the event of the financial institutions’ nonperformance. As
of January 31, 2020 and January 31, 2019, the outstanding foreign currency derivative contracts 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.

Fair Value Measurement

The Company measures its cash and cash equivalents, marketable securities and foreign currency derivative

contracts at fair value. In addition, the Company measures its strategic investments, including its publicly held
equity securities, privately held debt securities and privately held equity securities for which there has been an
observable price change in a same or similar security, at fair value. The additional disclosures regarding the
Company’s fair value measurements are included in Note 5 “Fair Value Measurement.”

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 . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . Shorter of the estimated

3 to 9 years
5 years

lease term or 10 years

Building and structural components . . . . . . . . Average weighted useful

Building improvements . . . . . . . . . . . . . . . . . .

life of 32 years
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 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.

79

Intangible Assets Acquired through Business Combinations

Intangible assets are amortized over their estimated 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. Management tests for impairment whenever events or changes
in circumstances occur that could impact the recoverability of these assets.

Impairment Assessment

The Company evaluates intangible assets and long-lived assets for possible impairment whenever events or
changes in 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. Recoverability of these assets is measured by
comparing 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, the carrying amount of such assets is reduced to fair value.

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

There were no material impairments of capitalized software, intangible assets, long-lived assets or goodwill

during fiscal 2020, 2019, and 2018, respectively.

Business Combinations

The Company uses its best estimates and assumptions to 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 recorded 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 statement of operations.

In the event the Company acquires an entity with which the Company has a preexisting relationship, the
Company will recognize a gain or loss to settle that relationship as of the acquisition date within the consolidated
statements of operations. In the event that the Company acquires an entity in which the Company previously held
a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the
carrying value of the strategic investment is recorded as a gain or loss and recorded within net gains (or losses)
on strategic investments in the consolidated statement of operations.

Leases

Effective at the start of fiscal 2020, the Company adopted the provisions and expanded disclosure
requirements described in Topic 842. The Company adopted the standard using the modified retrospective
method. Accordingly, the results for the prior comparable periods were not adjusted to conform to the current
period measurement or recognition of results.

80

The Company determines if an arrangement is a lease at inception. Operating leases are included in
operating lease right-of-use (“ROU”) assets and current and noncurrent operating lease liabilities on the
Company’s consolidated balance sheets. Finance leases are included in property and equipment, accrued
expenses and other liabilities, and other noncurrent liabilities on the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and the

corresponding lease liabilities represent its obligation to make lease payments arising from the lease. Lease ROU
assets and lease liabilities are recognized based on the present value of the future minimum lease payments over
the lease term at commencement date. The lease ROU asset is reduced for tenant incentives and excludes any
initial direct costs incurred. As the Company’s leases do not provide an implicit rate, the net present value of
future minimum lease payments is determined using the Company’s incremental borrowing rate. The Company’s
incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar
terms and payments, in an economic environment where the leased asset is located. The Company’s lease terms
may include options to extend or terminate the lease. These options are reflected in the ROU asset and lease
liability when it is reasonably certain that the Company will exercise the option. The Company reassesses the
lease term if and when a significant event or change in circumstances occurs within the control of the Company,
such as construction of significant leasehold improvements that are expected to have economic value when the
option becomes exercisable.

Lease expenses for minimum lease payments for operating leases are recognized on a straight-line basis
over the lease term. Amortization expense of the ROU asset for finance leases is recognized on a straight-line
basis over the lease term and interest expense for finance leases is recognized based on the incremental
borrowing rate.

The Company has lease agreements with lease and non-lease components, which it has elected to combine

for all asset classes. In addition, the Company does not recognize ROU assets or lease liabilities for leases with a
term of 12 months or less for all of its asset classes.

On the lease commencement date 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
amortized over the lease term to operating expense.

The Company additionally has entered into subleases for unoccupied leased office space. Any impairments

to the ROU asset, leasehold improvements or other assets as a result of a sublease are recognized in the period
the sublease is executed and recorded as an operating expense. Any sublease payments received in excess of the
straight-line rent payments for the sublease are recorded as an offset to operating expenses and recognized over
the sublease life.

Stock-Based Expense

Stock-based expenses related to stock options are measured based on grant date at fair value using the
Black-Scholes option pricing model and restricted stock awards based on grant date at fair value using the
closing stock price. The Company recognizes stock-based expenses related to stock options and restricted stock
awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which
is generally the vesting term of four years.

Stock-based expenses related to the Company’s Amended and Restated 2004 Employee Stock Purchase
Plan (“ESPP” or “2004 Employee Stock Purchase Plan”) are measured based on grant date at fair value using the
Black-Scholes option pricing model. The Company recognizes stock-based expenses related to shares issued
pursuant to the 2004 Employee Stock Purchase Plan on a straight-line basis over the offering period, which is 12
months. The ESPP allows employees to purchase shares of the Company’s common stock at a 15 percent
discount and also allows employees to reduce their percentage election once during a six month purchase period

81

(December 15 and June 15 of each fiscal year), but not increase that election until the next one-year offering
period. The ESPP also includes a re-set provision for the purchase price if the stock price on the purchase date is
less than the stock price on the offering date.

Stock-based expenses related to performance share grants, which are awarded to executive officers, are
measured based on grant date at fair value using a Monte Carlo simulation model and expensed on a straight-line
basis, net of estimated forfeitures, over the service period of the awards, which is generally the vesting term of
three years.

The Company, at times, grants unvested restricted shares to employee stockholders of certain acquired

companies in lieu of cash consideration. These awards are generally subject to continued post-acquisition
employment. Therefore, the Company accounts for them as post-acquisition stock-based expense. The Company
recognizes stock-based expense equal to the grant date fair value of the restricted stock awards on a straight-line
basis over the requisite service period of the awards, which is generally four years.

Advertising Expenses

Advertising is expensed as incurred. Advertising expense was $660 million, $482 million and $373 million

for fiscal 2020, 2019 and 2018, respectively.

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 statements of operations in the period that includes the enactment date.

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.

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. 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.

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 statement of comprehensive income. Foreign currency
transaction gains and losses are included in other income in the consolidated statement of operations for the

82

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 Fiscal 2020

ASU 2016-02

In February 2016, the FASB issued Topic 842, which requires lessees to record most leases on their balance

sheet but recognize the expenses on their statement of operations and cash flows on the statement of cash flows
in a manner similar to previous accounting guidance. Topic 842 generally requires that lessees recognize
operating and financing liabilities 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.

Effective on February 1, 2019, the Company adopted the provisions and expanded disclosure requirements

described in Topic 842. The Company adopted the standard using the transitional provision of Accounting
Standards Update 2018-11, “Leases (Topic 842) Targeted Improvements”, which allows for the adoption of
Topic 842 at the beginning of the fiscal year of adoption. As such, the consolidated balance sheet as of
January 31, 2020 is not comparable with that as of January 31, 2019. The Company elected the package of
practical expedients and therefore did not reassess prior conclusions on whether contracts are or contain a lease,
lease classification, and initial direct costs. The Company did not use hindsight when determining the lease term.

Upon adoption of Topic 842, leases previously designated as operating leases are now reported on the
consolidated balance sheet, which has materially increased total assets and liabilities. Specifically, the Company
recorded operating lease ROU assets of approximately $2.9 billion and corresponding operating lease liabilities
of $3.1 billion on its opening consolidated balance sheet. Leases previously designated as capital leases are now
identified as finance leases and continue to be reported on the consolidated balance sheet. In addition, the
previously recorded financing obligation and building asset associated with the Company’s leased facility at 350
Mission Street was derecognized and the lease is now accounted for as a finance lease on the Company’s
consolidated balance sheet. Topic 842 did not have a material impact to the Company’s consolidated statement of
operations or net cash provided by operating activities. The adoption did not impact the Company’s compliance
with its debt covenants.

83

Accounting Pronouncements Pending Adoption

ASU 2016-13

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) “Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires
the measurement and recognition of expected credit losses for financial assets held at amortized cost, which
includes the Company’s accounts receivables, certain financial instruments and contract assets. ASU 2016-13
replaces the existing incurred loss impairment model with an expected loss methodology, which will result in
more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim
periods within those years, beginning after December 15, 2019, and requires a cumulative effect adjustment to
the balance sheet as of the beginning of the first reporting period in which the guidance is effective. ASU
2016-13 will be effective for fiscal 2021, including interim periods within that reporting period. The Company
does not expect the adoption of ASU 2016-13 to be material.

ASU 2019-12

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic

740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”)”, which modifies and eliminates certain
exceptions to the general principles of ASC 740, Income taxes. The new standard is effective for interim and
annual periods beginning after December 15, 2020, and early adoption is permitted. The Company is currently
evaluating the impact of the adoption to its consolidated financial statements.

Reclassifications

Certain reclassifications to fiscal 2019 and fiscal 2018 balances were made to conform to the current period
presentation in the consolidated balance sheets and statements of operations. None of these reclassifications had
an impact to the Company’s key metrics including Total Assets, Total Revenues, Income From Operations, Net
Income or Operating Cash Flows.

2. Revenues

Disaggregation of Revenue

Subscription and Support Revenue by the Company’s service offerings

Subscription and support revenues consisted of the following (in millions):

Fiscal Year Ended January 31,

2020

2019

2018

Sales Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salesforce Platform and Other (1) . . . . . . . . . . . . . . . . . . . .
Marketing and Commerce Cloud . . . . . . . . . . . . . . . . . . . . .

$ 4,598
4,466
4,473
2,506

$ 4,040
3,621
2,854
1,898

$3,588
2,883
1,913
1,382

$16,043

$12,413

$9,766

(1)

Includes approximately $652 million of revenue in Fiscal 2020 from the Tableau acquisition.

84

Total Revenue by Geographic Locations

Revenues by geographical region consisted of the following (in millions):

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,051
3,430
1,617

$ 9,445
2,553
1,284

$ 7,621
1,916
1,003

$ 17,098

$13,282

$10,540

Fiscal Year Ended January 31,

2020

2019

2018

Revenues by geography are determined based on the region of the Company’s contracting entity, which may
be different than the region of the customer. Americas revenue attributed to the United States was approximately
96 percent during fiscal 2020, 2019 and 2018, respectively. No other country represented more than ten percent
of total revenue during fiscal 2020, 2019 and 2018, respectively.

Contract Balances

Contract Asset

As described in Note 1, subscription and support revenue is generally recognized ratably over the contract
term beginning on the commencement date of each contract. License revenue is recognized as the licenses are
delivered. The Company records a contract asset when revenue recognized on a contract exceeds the billings.
The Company’s standard billing terms are annual in advance. Contract assets were $449 million as of January 31,
2020 as compared to $215 million as of January 31, 2019, and are included in prepaid expenses and other current
assets on the consolidated balance sheet. Contract assets as of January 31, 2020 include the acquired contract
asset balance from the Tableau acquisition in August 2019 of $131 million. Impairments of contract assets were
immaterial during fiscal 2020, 2019 and 2018, respectively.

Unearned Revenue

Unearned revenue represents amounts that have been invoiced in advance of revenue recognition and is

recognized as revenue when transfer of control to customers has occurred or services have been provided. The
unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable
subscription agreements. The Company generally invoices customers in annual installments. The unearned
revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals,
invoice duration, invoice timing, dollar size and new business linearity within the quarter.

The change in unearned revenue was as follows (in millions):

Fiscal Year Ended
January 31,

2020

2019

Unearned revenue, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings and other (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution from contract asset
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized ratably over time . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized over time as delivered . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized at a point in time . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue from business combinations . . . . . . . . . . . . . . . . . . . . .

$ 8,564
18,662
101
(15,586)
(716)
(796)
433

$ 6,995
14,770
13
(12,426)
(629)
(227)
68

Unearned revenue, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10,662

$ 8,564

(1) Other includes, for example, the impact of foreign currency translation.

85

Revenue recognized ratably over time is generally billed in advance and includes Cloud Services, the related

support and advisory services.

Revenue recognized over time as delivered includes professional services billed on a time and materials

basis, fixed fee professional services and training classes that are primarily billed, delivered and recognized
within the same reporting period.

Revenue recognized at a point in time substantially consists of on-premise software licenses.

Approximately 50 percent of total revenue recognized in fiscal 2020 is from the unearned revenue balance

as of January 31, 2019.

Remaining Performance Obligation

Transaction price allocated to the remaining performance obligation, referred to by the Company as
remaining performance obligation, represents contracted revenue that has not yet been recognized, which
includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction
price allocated to the remaining performance obligation is influenced by several factors, including seasonality,
the timing of renewals, the timing of delivery of software licenses, average contract terms and foreign currency
exchange rates. Unbilled portions of the remaining performance obligation denominated in foreign currencies are
revalued each period based on the period end exchange rates. Unbilled portions of the remaining performance
obligation are subject to future economic risks including bankruptcies, regulatory changes and other market
factors.

The Company excludes amounts related to performance obligation that are billed and recognized as they are

delivered. This primarily consists of professional services contracts that are on a time-and-materials basis.

The majority of the Company’s noncurrent remaining performance obligation is expected to be recognized

in the next 13 to 36 months.

Remaining performance obligation consisted of the following (in billions):

As of January 31, 2020 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$15.0
$11.9

$15.8
$13.8

$30.8
$25.7

Current

Noncurrent

Total

(1)

Includes approximately $450 million and $650 million of remaining performance obligation related to the
Salesforce.org business combination in June 2019 and the Tableau acquisition in August 2019, respectively.

86

3. Investments

Marketable Securities

At January 31, 2020, marketable securities consisted of the following (in millions):

Investments classified as Marketable Securities

Corporate notes and obligations . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . . . . . . . .
Mortgage backed obligations . . . . . . . . . . . . . . . . . .
Asset backed securities . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government obligations . . . . . . . . . . . . . . .
U.S. agency obligations . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Covered bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total marketable securities . . . . . . . . . . . . . . . . . . .

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

$2,199
182
225
779
157
69
12
1
165

$3,789

$ 9
1
1
2
1
0
0
0
0

$14

$(1)
0
0
0
0
0
0
0
0

$(1)

$2,207
183
226
781
158
69
12
1
165

$3,802

At January 31, 2019, marketable securities consisted of the following (in millions):

Investments classified as Marketable Securities

Corporate notes and obligations . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . . . . . . . .
Mortgage backed obligations . . . . . . . . . . . . . . . . . .
Asset backed securities . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government obligations . . . . . . . . . . . . . . .
U.S. agency obligations . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Covered bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total marketable securities . . . . . . . . . . . . . . . . . . .

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

$1,027
89
79
245
104
58
4
4
75

$1,685

$0
0
0
0
0
0
0
0
0

$0

$ (8)
(1)
(1)
(1)
0
(1)
0
0
0

$(12)

$1,019
88
78
244
104
57
4
4
75

$1,673

The contractual maturities of the investments classified as marketable securities are as follows (in millions):

Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due in 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due in 5 years through 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of

January 31,
2020

January 31,
2019

$1,332
2,466
4

$3,802

$ 482
1,189
2

$1,673

As of January 31, 2020, the following marketable securities were in an unrealized loss position (in millions):

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 . . . . . . . . .

$285

$(1)

$0

$0

$285

$(1)

87

The unrealized losses for each of the fixed rate marketable securities were less than $1 million. 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 January 31, 2020, such as the Company’s intent to hold the investment
and whether it is more likely than not that the Company will be required to sell the investment before recovery of
the investment’s amortized basis. The Company expects to receive the full principal and interest on all of these
marketable securities.

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
millions):

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

$117
2
(1)

$118

2019

$61
1
(5)

$57

2018

$37
1
(2)

$36

Strategic Investments

Strategic investments by form and measurement category as of January 31, 2020 were as follows (in

millions):

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Measurement Category

Fair Value

Measurement
Alternative

$370
0

$370

$1,502
0

$1,502

Other

Total

$40
51

$91

$1,912
51

$1,963

Strategic investments by form and measurement category as of January 31, 2019 were as follows (in

millions):

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Measurement Category

Fair Value

Measurement
Alternative

$436
0

$436

$785
0

$785

Other

Total

$50
31

$81

$1,271
31

$1,302

88

Measurement Alternative Adjustments

The components of privately held equity securities accounted for under the measurement alternative

included in the table above are presented below (in millions):

Carrying amount, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments related to privately held equity securities:

Fiscal Year Ended
January 31,

2020

2019

$ 785

$548

Net additions (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Upward adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and downward adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

507
280
(70)

95
174
(32)

Carrying amount, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,502

$785

(1) Net additions include additions from purchases and reductions due to exits of securities and reclassifications

due to changes to capital structure.

In April 2019 the Company made a strategic investment of $100 million in cash for common shares of a
technology company in a private placement concurrent with the investee company’s initial public offering. In
September 2019, the Company made a strategic investment of $300 million in cash for preferred shares of a
technology company in a preferred stock financing. Additionally, in November 2019, the Company made a
strategic investment of $150 million in cash for preferred shares of a technology company in a preferred stock
financing. These investments were made as part of the Company’s overall strategy of investing in
complementary companies to facilitate potential alignment and integration into the Company’s offerings or
product features. These investments are accounted for using the measurement alternative.

Since the adoption of ASU 2016-01 on February 1, 2018, cumulative impairments and downward

adjustments were $102 million and cumulative upward adjustments were $454 million through January 31, 2020.

Gains (losses) on strategic investments, net

The components of gains and losses on strategic investments are presented below (in millions):

Unrealized gains recognized on publicly traded equity securities, net . . . .
Unrealized gains recognized on privately held equity securities, net . . . . .
Realized gains on sales of equity securities, net . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses on debt securities, net

Gains on strategic investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

2019

$138
208
95
(14)

$427

$345
133
74
(10)

$542

2018

$ 0
19
0
0

19

Realized gains on sales of equity securities, net reflects the difference between the sale proceeds and the

carrying value of the equity security at the beginning of the period or the purchase date, if later. The cumulative
net realized gain, measured as the sale price less the initial purchase price, for equity securities exited during
fiscal 2020 is $353 million.

Net unrealized gains recognized in fiscal 2020 for strategic investments still held as of January 31, 2020

were $290 million.

89

4. Derivatives

Details on outstanding foreign currency derivative contracts are presented below (in millions):

As of

January 31, 2020

January 31, 2019

Notional amount of foreign currency derivative contracts . . . . . . . .
Fair value of foreign currency derivative contracts . . . . . . . . . . . . .

$5,543
4

$4,496
25

The fair value of the Company’s outstanding derivative instruments not designated as hedging instruments

are summarized below (in millions):

Balance Sheet Location

January 31, 2020

January 31, 2019

As of

Derivative Assets
Foreign currency derivative contracts . . . . . Prepaid expenses and

other current assets

$28

$42

Derivative Liabilities
Foreign currency derivative contracts . . . . . Accounts payable,
accrued expenses
and other liabilities

$24

$17

Gains (losses) on derivative instruments not designated as hedging instruments recorded in other income in

the consolidated statements of operations are summarized below (in millions):

Foreign currency derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

$(9)

2019

$34

2018

$15

5. Fair Value Measurement

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. Significant other inputs that are directly or indirectly observable in the marketplace.

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

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.

90

The following table presents information about the Company’s assets and liabilities that are measured at fair

value as of January 31, 2020 and indicates the fair value hierarchy of the valuation (in millions):

Description

Cash equivalents (1):

Quoted Prices in
Active Markets
for Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Balance as of
January 31,
2020

Time deposits . . . . . . . . . . .
Money market mutual

funds . . . . . . . . . . . . . . . .

$

0

1,293

Marketable securities:

Corporate notes and

obligations . . . . . . . . . . . .
U.S. treasury securities . . . .
Mortgage backed

obligations . . . . . . . . . . . .
Asset backed securities . . . .
Municipal securities . . . . . .
Foreign government

obligations . . . . . . . . . . . .
U.S. agency obligations . . .
Time deposits . . . . . . . . . . .
Covered bonds . . . . . . . . . .

Strategic investments:

Publicly held equity

securities . . . . . . . . . . . . .

Foreign currency derivative

contracts (2)

. . . . . . . . . . . . . .

0
0

0
0
0

0
0
0
0

370

0

$ 746

$

0

2,207
183

226
781
158

69
12
1
165

0

28

Total assets . . . . . . . . . . . . . . . . .

$1,663

$4,576

Liabilities:
Foreign currency derivative

contracts (3)

. . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . .

$

0

0

24

24

$

$

$

0

0

0
0

0
0
0

0
0
0
0

0

0

0

0

0

$ 746

1,293

2,207
183

226
781
158

69
12
1
165

370

28

$6,239

24

24

$

(1)

(2)

(3)

Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31,
2020, in addition to $2.1 billion of cash.
Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet as
of January 31, 2020.
Included in “accounts payable, accrued expenses and other liabilities” in the accompanying consolidated
balance sheet as of January 31, 2020.

91

The following table presents information about the Company’s assets and liabilities that are measured at fair

value as of January 31, 2019 and indicates the fair value hierarchy of the valuation (in millions):

Description

Cash equivalents (1):

Quoted Prices in
Active Markets
for Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Balance as of
January 31,
2019

Time deposits . . . . . . . . . . . .
Money market mutual

funds . . . . . . . . . . . . . . . . .

$

0

1,234

Marketable securities:

Corporate notes and

obligations . . . . . . . . . . . .
U.S. treasury securities . . . . .
Mortgage backed

obligations . . . . . . . . . . . .
Asset backed securities . . . . .
Municipal securities . . . . . . .
Foreign government

obligations . . . . . . . . . . . .
U.S. agency obligations . . . .
Time deposits . . . . . . . . . . . .
Covered bonds . . . . . . . . . . .

Strategic investments:

Publicly held equity

securities . . . . . . . . . . . . . .

Foreign currency derivative

contracts (2) . . . . . . . . . . . . . . .

Total assets . . . . . . . . . . . . . . . . . .
Liabilities:
Foreign currency derivative

contracts (3) . . . . . . . . . . . . . . .

0
0

0
0
0

0
0
0
0

436

0

$1,670

$2,029

Total liabilities . . . . . . . . . . . . . . .

$

0

0

17

17

$

$ 314

$

0

1,019
88

78
244
104

57
4
4
75

0

42

$

$

0

0

0
0

0
0
0

0
0
0
0

0

0

0

0

0

$ 314

1,234

1,019
88

78
244
104

57
4
4
75

436

42

$3,699

17

17

$

(1)

(2)
(3)

Included in “cash and cash equivalents” in the accompanying consolidated balance sheet in addition to
$1.1 billion of cash.
Included in “prepaid expenses and other current assets” in the accompanying consolidated balance sheet.
Included in “accounts payable, accrued expenses and other liabilities” in the accompanying consolidated
balance sheet.

Strategic investments measured and recorded at fair value on a non-recurring basis

The Company’s privately held debt and equity securities and equity method investments are recorded at fair

value on a non-recurring basis. The estimation of fair value for these investments requires the use of significant
unobservable inputs, and as a result, the Company classifies these assets as Level 3 within the fair value
hierarchy. For example, the Company’s privately held equity securities that have been remeasured are classified
within Level 3 in the fair value hierarchy because the value is based on valuation methods using the observable
transaction price and other unobservable inputs including the volatility, rights, and obligations of the securities
the Company holds. The Company’s privately held debt and equity securities and equity method investments
amounted to $1.6 billion as of January 31, 2020 and $0.9 billion as of January 31, 2019.

92

6. Property and Equipment and Other Balance Sheet Accounts

Property and Equipment

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

As of

January 31, 2020

January 31, 2019

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and building improvements . . . . . . . . . . . . . . .
Computers, equipment and software . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, gross . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . .

$

184
777
1,608
226
1,381

4,176
(1,801)

Property and equipment, net . . . . . . . . . . . . . . . . . . .

$ 2,375

$

184
629
1,735
188
1,098

3,834
(1,783)

$ 2,051

Depreciation and amortization expense totaled $455 million, $411 million and $373 million during fiscal

2020, 2019 and 2018, respectively.

Computers, equipment and software at January 31, 2019 included a total of $671 million acquired under
capital lease agreements, as reported prior to the adoption of Topic 842. Accumulated amortization relating to
computers, equipment and software acquired under capital leases totaled $480 million at January 31, 2019.
Amortization of assets acquired under capital leases was included in depreciation and amortization expense for
fiscal 2019 and 2018.

Other Balance Sheet Accounts

Accounts payable, accrued expenses and other liabilities as of January 31, 2020 included approximately

$1.5 billion of accrued compensation as compared to $1.2 billion as of January 31, 2019.

7. Business Combinations

Fiscal Year 2020

Tableau Software, Inc.

In August 2019, the Company acquired all outstanding stock of Tableau Software, Inc. (“Tableau”) which

provides a self-service analytics platform that enables users to easily access, prepare, analyze, and present
findings in their data. The Company has included the financial results of Tableau in the consolidated financial
statements from the date of acquisition. The transaction costs associated with the acquisition were approximately
$40 million and were recorded in general and administrative expense. The acquisition date fair value of the
consideration transferred for Tableau was approximately $14.8 billion, which consisted of the following (in
millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of stock options and restricted stock awards

Fair Value

$

1
14,552

assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

292

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$14,845

93

The fair value of the stock options assumed by the Company was determined using the Black-Scholes
option pricing model. The share conversion ratio of 1.103 was applied to convert Tableau’s outstanding equity
awards for Tableau’s common stock into equity awards for shares of the Company’s common stock.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of

the date of acquisition (in millions):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired customer contract asset . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability and income tax payable . . . . . . . . . . . . . . . .

Fair Value

$

644
456
174
131
361
116
56
10,806
3,252
(257)
(242)
(332)
(320)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$14,845

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets

acquired was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded
market opportunities, for which there is no basis for U.S. income tax purposes. The fair values assigned to
tangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. The
provisional measurements of fair value for income taxes payable and deferred taxes set forth above may be
subject to change as additional information is received and certain tax returns are finalized. 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 and their estimated

useful lives as of the date of acquisition (in millions):

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . .
Other purchased intangible assets . . . . . . .

$2,000
1,231
21

5 years
8 years
1 year

Fair Value

Useful Life

Total intangible assets subject to

amortization . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,252

Developed technology represents the estimated fair value of Tableau’s data analysis technologies. Customer

relationships represent the estimated fair values of the underlying relationships with Tableau customers.

The Company assumed unvested stock options and restricted stock awards with an estimated fair value of

$1.5 billion. Of the total consideration, $292 million was allocated to the purchase consideration and $1.2 billion
was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

94

The amounts of revenue and earnings of Tableau included in the Company’s consolidated statement of

operations from the acquisition date of August 1, 2019 to January 31, 2020 are as follows (in millions):

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pretax loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 689
(503)

The following pro forma financial information summarizes the combined results of operations for the

Company and Tableau, as though the companies were combined as of the beginning of the Company’s fiscal
2019.

The unaudited pro forma financial information was as follows (in millions):

Fiscal Year Ended
January 31,

2020

2019

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pretax income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)

$17,599
270
(292)

$14,256
(82)
297

The pro forma financial information for all periods presented above has been calculated after adjusting the

results of Tableau to reflect the business combination accounting effects resulting from this acquisition, including
the amortization expense from acquired intangible assets and the stock-based compensation expense for unvested
stock options and restricted stock awards assumed as though the acquisition occurred as of the beginning of the
Company’s fiscal year 2019. The historical consolidated financial information has been adjusted in the pro forma
combined financial results to give effect to pro forma events that are directly attributable to the business
combination and factually supportable. The pro forma financial information is for informational purposes only
and is not indicative of the results of operations that would have been achieved if the acquisition had taken place
at the beginning of the Company’s fiscal 2019.

The pro forma financial information for fiscal 2020 and 2019 combines the historical results of the
Company for fiscal 2020 and 2019, the adjusted historical results of Tableau for the six months ended June 30,
2019 and the twelve months ended December 31, 2018, considering the differences in reporting periods and the
date the Company acquired Tableau, and the effects of the pro forma adjustments listed above. Prior to being
acquired, Tableau’s fiscal year concluded on December 31.

ClickSoftware Technologies, Ltd.

In October 2019, the Company acquired all outstanding stock of ClickSoftware Technologies, Ltd.

(“ClickSoftware”), which provides field service management solutions. The Company has included the financial
results of ClickSoftware, which were not material, in the consolidated financial statements from the date of
acquisition. The transaction costs associated with the acquisition were not material. The acquisition date fair
value of the consideration transferred for ClickSoftware was approximately $1.4 billion, which consisted of the
following (in millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of stock options assumed . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of pre-existing relationship . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair Value

$ 587
663
81
55

$1,386

The fair value of the stock options assumed by the Company was determined using the Black-Scholes

option pricing model. The share conversion ratio of 0.109592 was applied to convert ClickSoftware’s

95

outstanding equity awards for ClickSoftware’s common stock into equity awards for shares of the Company’s
common stock.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of

the date of acquisition (in millions):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and noncurrent

Fair Value

$

38
28
1,132
276
33

(55)
(40)
(26)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,386

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets

acquired was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded
market opportunities, for which there is no basis for U.S. income tax purposes. The fair values assigned to
tangible assets acquired and liabilities assumed are preliminary, based on management’s estimates and
assumptions and may be subject to change as additional information is received and certain tax returns are
finalized. 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 and their estimated

useful lives as of the date of acquisition (in millions):

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . .

$215
61

4 years
8 years

Fair Value

Useful Life

Total intangible assets subject to

amortization . . . . . . . . . . . . . . . . . . . . . . . . . .

$276

Developed technology represents the fair value of ClickSoftware’s field service management technology.
Customer relationships represent the fair values of the underlying relationships with ClickSoftware customers.

The Company assumed unvested options with a fair value of $103 million. Of the total consideration,
$81 million was allocated to the purchase consideration and $22 million was allocated to future services and will
be expensed over the remaining service periods on a straight-line basis.

The Company invested $14 million in a noncontrolling equity investment in ClickSoftware in July 2015.

The Company recognized a gain of approximately $39 million as a result of remeasuring its prior equity interest
in ClickSoftware held before the business combination. The gain is included in gains on strategic investments,
net in the consolidated statement of operations.

Salesforce.org

In June 2019, Salesforce.org, the independent nonprofit social enterprise that resold the Company’s service
offerings to non-profit and higher education organizations, was combined with the Company. The Company has

96

included the financial results of Salesforce.org, which are not material to income from operations in fiscal 2020,
in the consolidated financial statements from the date of acquisition. The business combination with
Salesforce.org in June 2019 contributed approximately $228 million total revenues in fiscal 2020. The
transaction costs associated with the acquisition were not material.

The Company paid a one-time cash payment of $300 million for all shares of Salesforce.org to the
independent, non-consolidated Salesforce.com Foundation (also referred to as the Foundation), which is
considered a related party as discussed in Note 16 “Related-Party Transactions.”

Prior to the business combination, the Company and Salesforce.org had existing reseller and resource
sharing agreements that, among other things, allowed Salesforce.org the right to resell select Company offerings
and related upgraded support to non-profit organizations and for-profit and non-profit educational institutions
free of charge or at discounted prices. Both agreements were effectively settled upon consummation of the
business combination.

Using an income approach, the Company assessed the contractual terms and conditions of the reseller
agreement as compared to current market conditions, such as the cost to service contracts sold under the reseller
agreement, and determined that the terms were not at fair value. Specifically, the reseller agreement provided
favorable terms to Salesforce.org by providing the Company’s products and services at no cost. As a result, the
Company recorded a non-cash charge of approximately $166 million within operating expenses on the date the
transaction closed. The loss represents the difference between the value of the remaining performance obligation
recorded by Salesforce.org under the reseller agreement and the value of the remaining performance obligation if
those same contracts had been sold at fair value.

The following table summarizes the business combination (in millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on settlement of Salesforce.org reseller agreement . . . . . . . . . . .

$ 300
(166)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 134

The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of

acquisition (in millions):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes and income taxes payable . . . . . . . . . . . . .

and noncurrent

Fair Value

$ 54
59
46
164

(39)
(138)
(12)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 134

The excess of purchase consideration over the fair value of net liabilities assumed was recorded as goodwill,

which is primarily attributed to the assembled workforce and expanded market opportunities, for which there is
no basis for U.S. income tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed
are based on management’s estimates and assumptions and may be subject to change as additional information is
received and certain tax returns are finalized. The Company expects to finalize the valuation as soon as
practicable, but not later than one year from the acquisition date.

97

MapAnything

In May 2019, the Company acquired all outstanding stock of MapAnything, Inc. (“MapAnything”), which
integrates map-based visualization, asset tracking and route optimization for field sales and service teams. The
Company has included the financial results of MapAnything, which are not material, in the consolidated financial
statements from the date of acquisition. The transaction costs associated with the acquisition were not material.

The acquisition date fair value of the consideration transferred for MapAnything was

approximately $213 million, which consisted of cash and the fair value of stock options and restricted stock
awards assumed. The Company recorded approximately $53 million for developed technology and customer
relationships with estimated useful lives of four to five years. The Company recorded approximately $152
million of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities
from integrating MapAnything’s technology with the Company’s other offerings. The majority of the goodwill
balance is not deductible for U.S. income tax purposes. The fair values assigned to tangible assets acquired and
liabilities assumed are based on management’s estimates and assumptions and may be subject to change as
additional information is received and certain tax returns are finalized. The Company expects to finalize the
valuation as soon as practicable, but not later than one year from the acquisition date.

The Company invested $23 million in a noncontrolling equity investment in MapAnything prior to the
acquisition. The Company recognized a gain of approximately $9 million as a result of remeasuring its prior
equity interest in MapAnything held before the business combination. The gain is included in gains on strategic
investments, net in the consolidated statement of operations.

Fiscal Year 2019

Datorama

In August 2018, the Company acquired all outstanding stock of Datorama, Inc. (“Datorama”), which
provides a platform for enterprises, agencies and publishers to integrate data across marketing channels and data
sources. The Company has included the financial results of Datorama, which are not material, in the consolidated
financial statements from the date of acquisition. The transaction costs associated with the acquisition were not
material. The acquisition date fair value of the consideration transferred for Datorama was approximately
$766 million, which consisted of the following (in millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of stock options and restricted stock awards

assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair Value

$136
537

93

$766

The fair value of the stock options assumed by the Company was determined using the Black-Scholes
option pricing model. The share conversion ratio of 0.4133 was applied to convert Datorama’s outstanding equity
awards for Datorama’s common stock into equity awards for shares of the Company’s common stock.

98

The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of

acquisition (in millions):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and noncurrent

Fair Value

$ 21
9
3
202
586

(10)
(4)
(41)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$766

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 and identifiable intangible assets
acquired and liabilities assumed are based on management’s estimates and assumptions.

The following table sets forth the components of identifiable intangible assets acquired and their estimated

useful lives as of the date of acquisition (in millions):

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . .
Other purchased intangible assets . . . . . . .

$159
42
1

4 years
8 years
1 year

Fair Value

Useful Life

Total intangible assets subject to

amortization . . . . . . . . . . . . . . . . . . . . . . . . . .

$202

Developed technology represents the fair value of Datorama’s technology. Customer relationships represent

the fair values of the underlying relationships with Datorama customers. The goodwill balance is primarily
attributed to assembled workforce and expanded market opportunities when integrating Datorama’s technology
with the Company’s other offerings. The goodwill balance is not deductible for U.S. income taxes purposes.

The Company assumed unvested options and restricted stock with a fair value of $170 million. Of the total

consideration, $93 million was allocated to the purchase consideration and $77 million was allocated to future
services and will be expensed over the remaining service periods on a straight-line basis.

99

MuleSoft

In May 2018, the Company acquired all outstanding stock of MuleSoft, which provides a platform for
building application networks that connect enterprise apps, data and devices, across any cloud and on-premise
solution. The Company has included the financial results of MuleSoft in the consolidated financial statements
from the date of acquisition. The transaction costs associated with the acquisition were approximately $24
million and were recorded in general and administrative expense. The acquisition date fair value of the
consideration transferred for MuleSoft was approximately $6.4 billion, which consisted of the following (in
millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of stock options and restricted stock awards

Fair Value

$4,860
1,178

assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

387

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,425

The fair value of the stock options assumed by the Company was determined using the Black-Scholes
option pricing model. The share conversion ratio of 0.3680 was applied to convert MuleSoft’s outstanding equity
awards for MuleSoft’s common stock into equity awards for shares of the Company’s common stock.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of

acquisition (in millions):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . .
Acquired customer contract asset, current and noncurrent—

intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and noncurrent

Fair Value

$

57
233
69
122
29

61
1,279
4,816

(40)
(57)
(144)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,425

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 and identifiable intangible assets
acquired and liabilities assumed 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.

100

The following table sets forth the components of identifiable intangible assets acquired and their estimated

useful lives as of the date of acquisition (in millions):

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . .
Other purchased intangible assets . . . . . . .

$ 224
1,046
9

4 years
8 years
1 year

Fair Value

Useful Life

Total intangible assets subject to

amortization . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,279

Developed technology represents the fair value of MuleSoft’s Anypoint technology. Customer relationships

represent the fair values of the underlying relationships with MuleSoft customers. The goodwill balance is
primarily attributed to the assembled workforce and expanded market opportunities when integrating MuleSoft’s
Anypoint technology with the Company’s other offerings. The goodwill balance is not deductible for U.S.
income tax purposes.

The Company assumed unvested options and restricted stock with a fair value of $824 million. Of the total
consideration, $387 million was allocated to the purchase consideration and $437 million was allocated to future
services and will be expensed over the remaining service periods on a straight-line basis.

The amounts of revenue and pretax loss of MuleSoft included in the Company’s consolidated statement of

operations from the acquisition date in May 2018 through January 31, 2019 are as follows (in millions):

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pretax loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 431
(286)

CloudCraze

In April 2018, the Company acquired all outstanding stock of CloudCraze LLC (“CloudCraze”), for
consideration consisting of cash and equity awards assumed. CloudCraze is a commerce platform that allows
businesses to generate online revenue and scale for growth. CloudCraze delivers interactions across commerce,
sales, marketing and service. The Company has included the financial results of CloudCraze in the consolidated
financial statements from the date of acquisition, which have not been material to date. The transaction costs
associated with the acquisition were not material.

The acquisition date fair value of the consideration transferred for CloudCraze was approximately
$190 million, which consisted of cash and the fair value of stock options and restricted stock awards assumed.
The Company recorded approximately $58 million for developed technology and customer relationships with
estimated useful lives of one to seven years. The Company recorded approximately $134 million of goodwill
which is primarily attributed to the assembled workforce and expanded market opportunities from integrating
CloudCraze’s technology with the Company’s other offerings. The goodwill balance is deductible for U.S.
income tax purposes.

Fiscal Year 2018

During fiscal 2018, the Company acquired two companies for an aggregate of $38 million in cash and

equity, net of cash acquired, and has included the financial results of these companies in its consolidated
financial statements from the dates of acquisition. The transactions were not material to the Company and the
costs associated with the acquisitions were not material. The Company accounted for the transactions as business
combinations. In allocating the purchase consideration based on estimated fair values, the Company recorded
$3 million of intangible assets and $35 million of goodwill. The majority of the goodwill balance associated with
these business combinations is deductible for U.S. income tax purposes.

101

8. Intangible Assets Acquired Through Business Combinations and Goodwill

Intangible assets acquired through business combinations

Intangible assets acquired through business combinations are as follows (in millions):

Intangible Assets, Gross

Accumulated Amortization

January 31,
2019

Additions and
retirements,
net

January 31,
2020

January 31,
2019

Expense and
retirements,
net

January 31,
2020

Intangible Assets, Net Weighted
Average
Remaining
Useful Life
(Years)

January 31,
2020

January 31,
2019

Acquired developed

technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . .
Other (1) . . . . . . . . . . . . . . . . . . .

$1,429
1,938
52

Total

. . . . . . . . . . . . . . . . . . . . . .

$3,419

$2,169
1,314
20

$3,503

$3,598
3,252
72

$ (889)
(560)
(47)

$6,922

$(1,496)

$(360)
(328)
(14)

$(702)

$(1,249)
(888)
(61)

$ 540
1,378
5

$(2,198)

$1,923

$2,349
2,364
11

$4,724

4.1
6.5
0.9

5.3

(1)

Included in other are trade names, trademarks and territory rights.

Amortization of intangible assets resulting from business combinations for fiscal 2020, 2019 and 2018 was

$792 million, $447 million and $287 million, respectively.

The expected future amortization expense for intangible assets as of January 31, 2020 is as follows (in

millions):

Fiscal Period:
Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,059
984
833
750
513
585

Total amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,724

Customer contract assets acquired through business combinations

Customer contract assets resulting from business combinations reflects the fair value of future billings of

amounts that are contractually committed by acquired companies’ existing customers as of the acquisition date.
Customer contract assets are amortized over the corresponding contract terms. Customer contract assets resulting
from business combinations for the fiscal year ended January 31, 2020 were $93 million, including $56 million
resulting from the Tableau acquisition in August 2019, and $121 million for the fiscal year ended January 31,
2019, respectively, and are included in other assets on the consolidated balance sheets.

Goodwill

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

102

The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, were

as follows (in millions):

Balance at January 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tableau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ClickSoftware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salesforce.org . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MapAnything . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other acquisitions and adjustments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,314
5,536
1

$12,851
10,806
1,132
164
152
29

$25,134

(1) Adjustments include adjustments of acquisition date fair value, including the effect of foreign currency

translation.

9. Debt

The carrying values of the Company’s borrowings were as follows (in millions):

Instrument

Date of issuance Maturity date

Effective interest rate
for fiscal 2020

January 31, 2020 January 31, 2019

2021 Term Loan (1) . . . . . . . . . . . . May 2018 May 2021
2023 Senior Notes . . . . . . . . . . . . . April 2018 April 2023
2028 Senior Notes . . . . . . . . . . . . . April 2018 April 2028
Loan assumed on 50 Fremont . . . . . February 2015 June 2023

3.07%
3.26%
3.70%
3.75%

Total carrying value of debt . . . . . .
Less current portion of debt . . . . . .

Total noncurrent debt . . . . . . . . . . .

$

0
995
1,489
193

2,677
(4)

$2,673

$ 499
993
1,488
196

3,176
(3)

$3,173

(1) The Company repaid in full the 2021 Term Loan in fiscal 2020.

Each of the Company’s debt agreements requires it to maintain compliance with certain debt covenants, all

of which the Company was in compliance with as of January 31, 2020.

The total estimated fair value of the Company’s 2023 and 2028 Senior Notes at January 31, 2020 was

$2.7 billion. The fair value was determined based on the closing trading price per $100 of the 2023 and 2028
Senior Notes as of the last day of trading for the fourth quarter of fiscal 2020 and is deemed a Level 2 liability
within the fair value measurement framework.

The expected future principal payments for all borrowings as of January 31, 2020 is as follows (in millions):

Fiscal period:
Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total principal outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

4
4
4
1,182
1,500

$2,694

103

Revolving Credit Facility

In April 2018, the Company entered into a Second Amended and Restated Credit Agreement (“Revolving
Loan Credit Agreement”) with Wells Fargo Bank, National Association, and certain other institutional lenders
that provides for $1.0 billion unsecured revolving credit facility (“Credit Facility”) that matures in April 2023.
The Revolving Loan Credit Agreement amended and restated the Company’s existing revolving credit facility
dated July 2016. The Company may use the proceeds of future borrowings under the Credit Facility for
refinancing other indebtedness, working capital, capital expenditures and other general corporate purposes,
including permitted acquisitions.

There were no outstanding borrowings under the Credit Facility as of January 31, 2020. The Company
continues to pay a commitment fee on the available amount of the Credit Facility, which is included within other
expense in the Company’s consolidated statement of operations.

Interest Expense on Debt

The following table sets forth total interest expense recognized related to debt (in millions):

Fiscal Year Ended
January 31,

2020

2019

2018

Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $106 $106 $23
5
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16
4

4
0

$ 110

$ 126

$ 54

10. Stockholders’ Equity

The Company maintains the following stock plans: the ESPP, the 2013 Equity Incentive Plan and the 2014

Inducement Equity Incentive Plan (“2014 Inducement Plan”).

As of January 31, 2020 and January 31, 2019, $107 million and $76 million, respectively, was withheld on

behalf of employees for future purchases under the ESPP and is recorded in accrued compensation.

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.

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:

Stock Options

Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated life . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . .
Weighted-average fair value per share of

Fiscal Year Ended January 31,

2020

2019

2018

27-30%

27-28%

28-31%

3.5 years

3.5 years

3.5 years

1.6-2.5%

2.5-3.0%

1.4-2.3%

grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

39.59

$

28.89

$

22.71

ESPP

Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated life . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . .
Weighted-average fair value per share of

Fiscal Year Ended January 31,

2020

2019

2018

28-33%

23-26%

21-28%

0.75 years

0.75 years

0.75 years

1.6-2.1%

2.0-2.6%

1.1-1.7%

grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

41.43

$

32.90

$

23.64

104

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. 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.

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.

In fiscal 2020 and 2019, the Company granted performance-based restricted stock unit awards to certain

employees, including the Chair of the Board and Chief Executive Officer and other senior executives. The
performance-based restricted stock unit awards are 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, these performance-based restricted stock units will vest in a percentage of the target number of
shares between 0 and 200%, depending on the extent the performance condition is achieved.

Stock option activity, excluding the ESPP is as follows:

Options Outstanding

Shares
Available for
Grant
(in millions)

Outstanding
Stock
Options
(in millions)

Weighted-
Average
Exercise Price

Aggregate
Intrinsic Value
(in millions)

Balance as of January 31, 2019 . . . . . . . .

Increase in shares authorized:

2013 Equity Incentive Plan . . .
2014 Inducement Plan . . . . . . .
Assumed equity plans . . . . . . . .
Options granted under all plans . . . .
Restricted stock activity . . . . . . . . . .
Performance-based restricted stock

units . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Plan shares expired or canceled . . . .

Balance as of January 31, 2020 . . . . . . . .

Vested or expected to vest

. . . . . . . . . . . .

Exercisable as of January 31, 2020 . . . . .

64

36
2
13
(10)
(28)

(2)
0
2

77

26

0
0
0
10
0

0
(7)
(2)

27

25

14

$ 74.15

0.00
0.00
0.00
132.72
0.00

0.00
55.67
116.84

$ 98.56

$ 95.80

$ 66.34

$2,222

$2,155

$1,589

The total intrinsic value of the options exercised during fiscal 2020, 2019, and 2018 was $799 million,
$784 million, and $373 million, respectively. The intrinsic value of options exercised during each fiscal year is
calculated as the difference between the market value of the stock at the time of exercise and the exercise price of
the stock option.

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

four years.

As of January 31, 2020, options to purchase 14 million shares were vested at a weighted-average exercise
price of $66.34 per share and had a remaining weighted-average contractual life of approximately three years.
The total intrinsic value of these vested options based on the market value of the stock as of January 31, 2020
was approximately $1.6 billion.

105

During fiscal 2020, the Company recognized stock-based expense related to its equity plans for employees

and non-employee directors of $1.8 billion. As of January 31, 2020, the aggregate stock compensation remaining
to be recognized to costs and expenses was approximately $4.0 billion.

The aggregate stock compensation remaining to be recognized as of January 31, 2020 is as follows (in

millions):

Fiscal Period:
Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,787
1,254
778
197

$4,016

The expected stock compensation remaining to be recognized reflects only outstanding stock awards as of

January 31, 2020 and assumes no forfeiture activity. The aggregate stock compensation remaining to be
recognized to costs and expenses will be recognized over a weighted-average period of two years.

The following table summarizes information about stock options outstanding as of January 31, 2020:

Range of Exercise
Prices

$0.36 to $52.30 . . . . . . . . . . . . .
$54.36 to $75.57 . . . . . . . . . . . .
$76.48 to $113.00 . . . . . . . . . . .
$118.04 . . . . . . . . . . . . . . . . . . .
$122.03 to $158.76 . . . . . . . . . .
$161.50 . . . . . . . . . . . . . . . . . . .

Options Outstanding

Options Exercisable

Number
Outstanding
(in millions)

Weighted-Average
Remaining
Contractual Life
(Years)

Weighted-Average
ExercisePrice

Number of
Shares
(in millions)

Weighted-Average
ExercisePrice

5
6
3
4
3
6

27

3.7
3.0
3.4
5.1
6.3
6.1

4.5

$ 29.10
67.41
83.71
118.04
145.38
161.50

$ 98.56

4
5
3
2
0
0

14

$ 30.55
66.08
82.59
118.04
133.49
0.00

$ 66.34

Restricted stock activity is as follows:

Restricted Stock Outstanding

Outstanding
(in millions)

Balance as of January 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted - restricted stock units and awards . . . . . . . . . . . . . . . . . . . . . . . .
Granted - performance-based stock units . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested and converted to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected to vest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21
20
1
(2)
(12)

28

24

Aggregate
Intrinsic
Value (in
millions)

Weighted-
Average
Grant
Date Fair
Value

$103.33
156.21
161.50
120.93
106.39

$140.14

$5,128

$4,452

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

106

common stock, and generally vests over four years. The total fair value of shares vested during fiscal 2020, 2019
and 2018 was $1.9 billion, $1.1 billion and $1.0 billion, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at

January 31, 2020 (in millions):

Options outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock awards and units and performance-based stock

units outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock available for future grant or issuance:

2013 Equity Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 Inducement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired equity plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amended and Restated 2004 Employee Stock Purchase

Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27

28

74
2
1

1
133

Preferred Stock

The Company’s board of directors has the authority, without further action by stockholders, to issue up to
5,000,000 shares of preferred stock in one or more series. The Company’s board of directors may designate the
rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights,
voting rights, terms of redemption, liquidation preference, sinking fund terms, and number of shares constituting
any series or the designation of any series. The issuance of preferred stock could have the effect of restricting
dividends on the Company’s common stock, diluting the voting power of its common stock, impairing the
liquidation rights of its common stock, or delaying or preventing a change in control. As of January 31, 2020 and
2019, no shares of preferred stock were outstanding.

11. Income Taxes

The domestic and foreign components of income before provision for (benefit from) income taxes consisted

of the following (in millions):

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

$686
20

$ 706

2019

$839
144

$ 983

2018

$160
260

$ 420

107

The provision for (benefit from) income taxes consisted of the following (in millions):

Current:

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total
Deferred:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

2019

2018

$

8
33
512

553

(41)
8
60

27

$

0
39
117

156

(248)
(37)
2

(283)

$ (7)
2
85

80

(2)
(14)
(4)

(20)

Provision for (benefit from) income taxes . . . . . . . . .

$580

$(127)

$ 60

In fiscal 2020, the Company recorded a tax provision primarily driven by incremental tax costs associated

with the integration of acquired operations and assets and profitable jurisdictions outside of the United States. In
fiscal 2019, the Company released a portion of its valuation allowance related to federal and state deferred tax
assets, which was partially offset with the increase in unrecognized tax benefits. In addition, the Company
recorded tax expense for profitable jurisdictions outside of the United States. In fiscal 2018, the Company
recorded tax expense primarily from profitable jurisdictions outside of the United States.

A reconciliation of income taxes at the statutory federal income tax rate to the provision for (benefit from)

income taxes included in the accompanying consolidated statements of operations is as follows (in millions):

U.S. federal taxes at statutory rate (1)
. . . . . . . . . . . . . . . .
State, net of the federal benefit . . . . . . . . . . . . . . . . . . . . . .
Effects of non-U.S. operations (2) . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits related to shared based

compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of U.S. tax law change . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net

Fiscal Year Ended January 31,

2020

2019

2018

$ 148
40
540
(195)
119

(166)
6
85
3

$ 206
79
379
(132)
63

(137)
43
(612)
(16)

$ 142
(21)
(35)
(107)
53

(135)
126
42
(5)

Provision for (benefit from) income taxes . . . . . . . . . . . . .

$ 580

$(127)

$ 60

(1) The Company’s statutory rates were 21.0 percent for fiscal 2020 and fiscal 2019, and 33.8 percent for fiscal

2018 which reflected the corporate tax rate reduction effective January 1, 2018 due to the Tax Act.

(2) Fiscal 2020 Effects of non-U.S. operations included incremental tax costs associated with the integration of

acquired operations and assets.

Deferred Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of

assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

108

Significant components of the Company’s deferred tax assets and liabilities were as follows (in millions):

As of January 31,

2020

2019

Deferred tax assets:

Losses and deductions carryforward . . . . . . . . . . . . . . . .
Deferred stock-based expense . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax assets, net of valuation allowance . . . . . . . . . . .
Deferred tax liabilities:

Deferred commissions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchased intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . .
Basis difference on strategic and other investments . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . .

$ 218
193
913
0
214
769
9
4
22

2,342
(290)

2,052

(449)
(915)
(76)
(69)
0
(695)

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,204)

$ 173
145
605
71
138
0
102
0
22

1,256
(205)

1,051

(347)
(382)
(145)
(56)
(17)
0

(947)

Net deferred tax assets (liabilities)

. . . . . . . . . . . . . . . . . . . . .

$ (152)

$ 104

At January 31, 2020, for federal income tax purposes, the Company had net operating loss carryforwards of
approximately $2.4 billion, which expire in fiscal 2021 through 2038 with the exception of post-2017 losses that
do not expire, federal research and development tax credits of approximately $626 million, which expire in fiscal
2021 through fiscal 2040, foreign tax credits of approximately $141 million, which expire in fiscal 2021 through
fiscal 2029. For California income tax purposes, the Company had net operating loss carryforwards of
approximately $781 million which expire beginning in fiscal 2021 through fiscal 2040, California research and
development tax credits of approximately $366 million, which do not expire. For other states’ income tax
purposes, the Company had net operating loss carryforwards of approximately $1.2 billion, which expire
beginning in fiscal 2021 through fiscal 2040 and tax credits of approximately $56 million, which expire
beginning in fiscal 2021 through fiscal 2040. Utilization of the Company’s net operating loss carryforwards may
be subject to substantial annual limitation due to the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net
operating loss and tax credit carryforwards before utilization.

The Company had a valuation allowance of $290 million and $205 million as of January 31, 2020 and

January 31, 2019 respectively. The Company regularly assesses the realizability of its deferred tax assets and
establishes a valuation allowance if it is more-likely-than-not that some or all of its deferred tax assets will not be
realized. The Company evaluates and weighs all available positive and negative evidence such as historic results,
future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and
feasible tax-planning strategies. The assessment requires significant judgment and is performed in each of the
applicable jurisdictions. The valuation allowance at the end of January 31, 2020 was primarily related to U.S.
states’ net operating loss and tax credits, and certain U.S foreign tax credits. The Company will continue to
evaluate the need for valuation allowances for its deferred tax assets.

109

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. 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, based on the technical merits. The tax benefit recognized is
measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement
with the taxing authority. The Company had gross unrecognized tax benefits of $1.4 billion, $852 million, and
$304 million as of January 31, 2020, 2019, and 2018 respectively.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits for fiscal years

2020, 2019 and 2018 is as follows (in millions):

Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax positions taken in prior period:

Gross increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decreases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax positions taken in current period:

Gross increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

852

2019

$ 304

2018

$ 231

12
(37)

640
(27)
(4)
(3)

474
(2)

107
(15)
(10)
(6)

31
(6)

51
(1)
(8)
6

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,433

$852

$304

In fiscal 2020, the Company reported a net increase of approximately $581 million in its unrecognized tax

benefits primarily for the incremental tax costs associated with the integration of the acquired operations and
assets. In fiscal 2019, the Company reported an increase of approximately $548 million in its recognized tax
benefits primarily for tax issues related to the integrations of certain historical acquisitions as a result of recent
developments of on-going audits and court cases. For fiscal 2020 and 2019, total unrecognized tax benefits in an
amount of $1.2 billion and $631 million, respectively, if recognized, would have reduced income tax expense and
the Company’s effective tax rate. For fiscal 2018, total unrecognized tax benefits in an amount of $77 million, if
recognized, would have reduced income tax expense and the Company’s effective tax rate after considering the
impact of the change in valuation allowance in the U.S.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the income

tax provision. The Company recorded an immaterial amount for penalties and interest for each of fiscal 2020,
2019 and 2018.

Certain prior year tax returns are currently being examined by various taxing authorities in countries
including the United States, France, and Germany. In January 2020, the Company reached a settlement with the
IRS Appeals primarily related to transfer pricing issues in earlier tax years, and income tax reserves were
adjusted accordingly. The Company believes that it has provided adequate reserves for its income tax
uncertainties in all open tax years. As 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.

The Company has operations and taxable presence in multiple jurisdictions in the U.S. and outside of the

U.S. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax
jurisdictions around the world. The Company currently considers U.S. federal, Japan, Australia, Germany,
France, United Kingdom, and Israel to be major tax jurisdictions. The Company’s U.S. federal tax returns since
fiscal 2008 remain open to examination. With some exceptions, tax years prior to fiscal 2016 in jurisdictions

110

outside of U.S. are generally closed. However, in Japan and United Kingdom, the Company is no longer subject
to examinations for years prior to fiscal 2015 and fiscal 2017, respectively.

The Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to

approximately $18 million may occur in the next 12 months, as the applicable statutes of limitations lapse.

12. 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 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 millions):

Fiscal Year Ended January 31,

2020

2019

2018

Numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$126

$1,110

$360

Denominator:
Weighted-average shares outstanding for basic earnings per
share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of dilutive securities:

829

751

715

Convertible senior notes which matured in April

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee stock awards . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants which settled in June and July 2018 . . . . . . . .

0
21
0

1
21
2

5
14
1

Adjusted weighted-average shares outstanding and assumed
conversions for diluted earnings per share . . . . . . . . . . . .

850

775

735

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings

per share for fiscal 2020 reflects the impact of approximately 102 million shares issued in relation to the
acquisitions of Tableau and ClickSoftware in the third quarter fiscal 2020.

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 millions):

Employee stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended January 31,

2020

7

2019

4

2018

7

111

13. Leases and Other Commitments

Leases

The Company has operating leases for corporate offices, data centers, and equipment under non-cancelable

operating leases with various expiration dates. The leases have remaining terms of 1 year to 23 years, some of
which include options to extend for up to 5 years, and some of which include options to terminate within 1 year.

The components of lease expense were as follows (in millions):

Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance lease cost:

Amortization of right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total finance lease cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$913

$ 65
20

$ 85

Fiscal Year Ended
January 31, 2020

Supplemental cash flow information related to operating and finance leases was as follows (in millions):

Fiscal Year Ended
January 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating cash outflows for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing cash outflows for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right-of-use assets obtained in exchange for lease obligations:

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$827
15
164

509

Supplemental balance sheet information related to operating and finance leases was as follows (in millions):

As of January 31, 2020

Operating leases:

Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating lease liabilities, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance leases:

Buildings and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computers, equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,040

$ 750
2,445

$ 3,195

$ 325
468
(404)

$

$

$

389

53
332

385

112

Other information related to leases was as follows:

Weighted average remaining lease term

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 years
18 years

Weighted average discount rate

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.7%
4.5%

As of January 31, 2020

The weighted average remaining lease term for real estate leases with multiple floors with different lease

end dates is calculated based on the lease end date for each individual floor.

As of January 31, 2020, the maturities of lease liabilities under non-cancelable operating and finance leases

are as follows (in millions):

Operating Leases

Finance Leases

Fiscal Period:

Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total minimum lease payments . . . . . . . . . . . . . . . . . . . . .
Less: Imputed interest . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 819
624
448
348
285
1,020

3,544
(349)

$3,195

$ 67
23
23
24
24
410

571
(186)

$ 385

Operating lease amounts above do not include sublease income. The Company has entered into various
sublease agreements with third parties. Under these agreements, the Company expects to receive sublease income
of approximately $169 million in the next five years and $55 million thereafter.

The Company’s lease terms may include options to extend or terminate the lease. These options are
reflected in the Company’s future contractual obligations when it is reasonably certain that the Company will
exercise that option. The Company did not use hindsight when determining lease term, therefore, as of
January 31, 2020, renewal options are only included for the Company’s finance lease for 350 Mission.

As of January 31, 2020, the Company has additional operating leases that have not yet commenced totaling

$2.4 billion and therefore not reflected on the consolidated balance sheet and tables above. These operating
leases include agreements for office facilities to be constructed. These operating leases will commence between
fiscal year 2021 and fiscal year 2025 with lease terms of 1.5 to 18 years.

Of the total operating lease commitment balance, including leases not yet commenced, of $5.9 billion,
approximately $5.4 billion is related to facilities space. The remaining commitment amount is primarily related
to equipment.

113

As of January 31, 2019, prior to the adoption of Topic 842, future minimum lease payments under

non-cancelable operating and capital leases was as follows (in millions):

Capital
Leases (1)

Operating
Leases (2)

Financing
Obligation-Leased
Facility (3)

Fiscal Period:
Fiscal 2020 . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . .

Total minimum lease payments . . . . . .

$200
0
0
0
0
0

200

$ 778
658
466
369
314
1,610

$4,195

Less: amount representing interest . . . .

(9)

Present value of capital lease

obligations . . . . . . . . . . . . . . . . . . . .

$191

$ 22
23
23
24
24
163

$279

(1) As of January 31, 2019, the capital lease obligation is included in accrued expenses and other liabilities on

the consolidated balance sheet.

(2) Operating leases do not include sublease income. The Company has entered into various sublease

agreements with third parties. Under these agreements, the Company expects to receive sublease income of
approximately $146 million in the next five years and $79 million thereafter.

(3) Total Financing Obligation—Leased Facility represents the total obligation on the Company’s lease

agreement at 350 Mission including amounts allocated to interest and the implied lease for the land. As of
January 31, 2019, $215 million of the total $279 million above was recorded to Financing obligation leased
facility, of which the current portion is included in accrued expenses and other liabilities and the noncurrent
portion is included in other noncurrent liabilities on the consolidated balance sheet. Upon adoption of ASC
842, the lease is accounted for as a finance lease.

Rent expense for fiscal 2019 and 2018 was $365 million and $285 million, respectively.

Letters of Credit

As of January 31, 2020, the Company had a total of $94 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 2033.

14. Employee Benefit Plans

The Company has a 401(k) plan covering all eligible employees in the United States and a Registered
Retirement Savings plan covering all eligible employees in Canada. Since January 1, 2006, the Company has
been contributing to the plans. Total Company contributions during fiscal 2020, 2019 and 2018, were
$127 million, $106 million and $93 million, respectively.

15. Legal Proceedings and Claims

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

114

In December 2018, the Company was named as a nominal defendant and certain of its current and former

directors were named as defendants in a purported shareholder derivative action in the Delaware Court of
Chancery. The complaint alleged that excessive compensation was paid to such directors for their service,
included claims of breach of fiduciary duty and unjust enrichment, and sought restitution and disgorgement of a
portion of the directors’ compensation. Subsequently, three similar shareholder derivative actions were filed in
the Delaware Court of Chancery. The cases were consolidated under the caption In re Salesforce.com, Inc.
Derivative Litigation. The parties agreed to settle the consolidated action, and the Delaware Court of Chancery
approved the settlement in December 2019. No appeals were filed and the deadline to file an appeal has passed.

Tableau Litigation

In July and August 2017, two substantially similar securities class action complaints were filed against

Tableau and two of its now former executive officers. The first complaint was filed in the U.S. District for the
Southern District of New York (the “Scheufele Action”). The second complaint was filed in the U.S. District
Court for the Western District of Washington and was voluntarily dismissed on October 17, 2017. In December
2017, the lead plaintiff in the Scheufele Action filed an amended complaint, which alleged that between
February 5, 2015 and February 4, 2016, Tableau and certain of its executive officers violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, in
connection with statements regarding Tableau’s business and operations by allegedly failing to disclose that
product launches and software upgrades by competitors were negatively impacting Tableau’s competitive
position and profitability. The amended complaint sought unspecified damages, interest, attorneys’ fees and other
costs. In February 2018, the lead plaintiff filed a second amended complaint (the “SAC”), which contains
substantially similar allegations as the amended complaint, and added as defendants two of Tableau’s now
former executive officers and directors. Defendants filed a motion to dismiss the SAC in March 2018, which was
denied in February 2019. Defendants filed an answer to the SAC in March 2019, and subsequently amended their
answer in April 2019. On January 15, 2020, the court granted lead plaintiff’s motion for certification. The parties
have completed fact discovery and engaged in expert discovery. The court has not yet set a trial date.

In August 2018, Tableau was named as a nominal defendant in a purported shareholder derivative action in

the United States District Court for the District of Delaware, allegedly on behalf of and for the benefit of
Tableau, against certain of its now former directors and officers. The derivative action arises out of many of the
factual allegations at issue in the Scheufele Action, and generally alleges that the individual defendants breached
fiduciary duties owed to Tableau. The complaint seeks unspecified damages and equitable relief, attorneys’ fees,
costs and expenses. The case is currently stayed.

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. The outcomes of legal
proceedings and other contingencies are, however, inherently unpredictable and subject to significant
uncertainties. As a result, the Company is not able to reasonably estimate the amount or range of possible losses
in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary
remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.

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 or other contingency, an unfavorable resolution of a matter could

115

materially affect the Company’s current or future results of operations or cash flows, or both, in a particular
quarter.

16. Related-Party Transactions

In January 1999, 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 was a non-profit public benefit corporation,
was established to resell the Company’s services to non-profit organizations and certain higher education
organizations. As discussed in Note 7, in June 2019, the Company completed a business combination with
Salesforce.org.

The Company’s Chair is the chair of the Foundation and, prior to the closing of the business combination,
was the chairman of Salesforce.org. The Company’s Chair holds one of the three Foundation board seats. Prior to
the closing of the business combination, the Company’s Chair, one of the Company’s employees and one of the
Company’s board members held three of Salesforce.org’s eight board seats. Prior to the closing of the business
combination, the Company did not control the Foundation’s or Salesforce.org’s activities, and accordingly, the
Company did not consolidate either of the related entities’ statement of activities with its financial results.

Since the Foundation’s and Salesforce.org’s inception, and prior to the closing of the business combination

with Salesforce.org, the Company 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 $6 million in fiscal 2020, prior to the business combination. The value of these items was
approximately $15 million and $11 million for fiscal 2019 and 2018, respectively.

Additionally, the Company allowed Salesforce.org to donate subscriptions of the Company’s services to
other qualified non-profit organizations. Prior to the closing of the business combination with Salesforce.org, the
value of the subscriptions sold by Salesforce.org to external customers pursuant to the reseller agreement, as
amended, was approximately $110 million for fiscal 2020, prior to the business combination. The value of the
subscriptions sold by Salesforce.org pursuant to the reseller agreement, as amended, was approximately
$253 million and $183 million for fiscal 2019 and 2018, respectively.

As discussed in Note 7 “Business Combinations”, in June 2019, the Company reorganized its relationship

with Salesforce.org, which was accounted for as a business combination. This transaction did not change the
relationship and accounting considerations with the Foundation, as described above.

17. Subsequent Events

In February 2020, the Company entered into an agreement to acquire Vlocity, Inc (“Vlocity”), a leading
provider of industry-specific cloud and mobile software. Under the terms of the agreement, the Company will
acquire Vlocity for an amount expected to be approximately $1.33 billion, net of the value of shares currently
owned by the Company, subject to customary purchase price adjustments. The purchase price will be paid
predominantly in cash but also includes the assumption of outstanding equity awards held by Vlocity employees.
The acquisition is expected to close in the second quarter fiscal 2021, subject to customary closing conditions,
including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

In February 2020, the Company acquired all outstanding stock of a cloud-based real-time personalization
and customer data platform. Beginning with the fiscal quarter ended April 30, 2020, the Company will include
the financial results of the acquired company in its consolidated financial statements from the date of the
acquisition. The total estimated consideration paid was approximately $100 million. The purchase price was paid
predominantly in cash but also included the assumption of outstanding equity awards held by the acquired
company’s employees.

116

In February 2020, the Company made a strategic investment of $150 million in cash for preferred shares of

a technology company in a preferred stock financing.

In February 2020, the Company announced that Keith Block resigned as co-CEO and as a director of the
Company. The Company entered into an agreement (the “Transition Agreement”) with Mr. Block setting forth
the terms of Mr. Block’s transition from the Company, whereby he will continue to serve as Advisor to the Chief
Executive Officer through February 25, 2021, subject to early termination by the Company for cause, as defined
in the Transition Agreement, by Mr. Block for any reason upon ten days’ written notice, or automatic termination
upon Mr. Block’s acceptance of employment or other full-time services with a third party.

18. Selected Quarterly Financial Data (Unaudited)

Selected summarized quarterly financial information for fiscal 2020 and 2019 is as follows:

Fiscal 2020
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from operations . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Net income (loss)
Basic net income (loss) per share . . . . . . . . .
Diluted net income (loss) per share . . . . . . . .

Fiscal 2019
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic net income per share . . . . . . . . . . . . . .
Diluted net income per share . . . . . . . . . . . . .

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Fiscal Year

(in millions, except per share data)

$3,737
2,823
210
$ 392
$ 0.51
$ 0.49

$3,006
2,239
191
$ 344
$ 0.47
$ 0.46

$3,997
3,030
58
91
$
$ 0.12
$ 0.11

$3,281
2,432
115
$ 299
$ 0.40
$ 0.39

$4,513
3,379
65
$ (109)
$ (0.12)
$ (0.12)

$4,851
3,631
(36)
$ (248)
$ (0.28)
$ (0.28)

$3,392
2,503
92
$ 105
$ 0.14
$ 0.13

$3,603
2,657
137
$ 362
$ 0.47
$ 0.46

$17,098
12,863
297
126
0.15
0.15

$
$
$

$13,282
9,831
535
$ 1,110
1.48
$
1.43
$

The Company’s loss from operations in the fourth quarter fiscal 2020 was impacted by the timing of its

annual marketing event Dreamforce, which occurred in November 2019 as compared to the third quarter fiscal
2019, as well as the timing of integration and other investments in Tableau. The Company’s fourth quarter fiscal
2020 tax provision included incremental tax costs associated with the integration of acquired operations and
assets.

117

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive

officer and principal 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 principal executive officer and principal financial officer concluded

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

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

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). 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 our internal control over financial reporting as of January 31,
2020 based on the guidelines established in the Internal Control—Integrated Framework (2013 framework)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our internal
control over financial reporting includes policies and procedures that provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external reporting purposes in
accordance with U.S. generally accepted accounting principles.

In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted
to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal
year in which the acquisition occurred. Our management’s evaluation of internal control over financial reporting
excluded the internal control activities of Tableau Software, Inc. (“Tableau”), which we acquired in August 2019,
ClickSoftware Technologies, Ltd. (“ClickSoftware”) which we acquired in October 2019 and Salesforce.org,
which we acquired in June 2019, as discussed in Note 7, “Business Combinations,” of the Notes to the
Consolidated Financial Statements. We have included the financial results of these in the consolidated financial
statements from the date of acquisition. Total revenues and net income subject to Tableau’s, ClickSoftware’s and
Salesforce.org’s internal control over financial reporting represented approximately six percent and twenty three
percent of our consolidated total revenues and net income for the fiscal year ended January 31, 2020,
respectively. Total assets and net assets subject to Tableau’s, ClickSoftware’s and Salesforce.org’s internal
control over financial reporting represented approximately three percent and one percent of our consolidated total
assets and net assets, excluding acquisition method fair value adjustments, as of January 31, 2020, respectively.

118

Based on the results of our evaluation, our management concluded that our internal control over financial
reporting was effective as of January 31, 2020. We reviewed the results of management’s assessment with our
Audit Committee.

The effectiveness of our internal control over financial reporting as of January 31, 2020 has been audited by
Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which is included in
Item 8 of this Annual Report on Form 10-K.

(c) Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended

January 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

(d) Inherent Limitations on Effectiveness of Controls

Our management, including our chief executive officer and chief financial officer, do not expect that our

disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a
simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of the controls. The design of any system of controls
is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls
may become inadequate because of changes in conditions, or the degree of compliance with policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.

ITEM 9B. OTHER INFORMATION

Not applicable.

119

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information concerning our directors, our Audit Committee and any changes to the process by which
stockholders may recommend nominees to the Board required by this Item are incorporated herein by reference
to information contained in the Proxy Statement, including “Directors and Corporate Governance” and, as
applicable, “Delinquent Section 16(a) Reports.”

The information concerning our executive officers required by this Item is incorporated by reference herein

to the section of this Annual Report on Form 10-K in Part I, entitled “Information About Our Executive
Officers.”

We have adopted a code of ethics, our Code of Conduct, which applies to all employees, including our

principal executive officer, Marc Benioff, principal financial officer, Mark Hawkins, principal accounting
officer, Joe Allanson, and all other executive officers. The Code of Conduct is available on our website at http://
investor.salesforce.com/about-us/investor/corporate-governance/. A copy may also be obtained without charge
by contacting Investor Relations, salesforce.com, inc., Salesforce Tower, 415 Mission St, 3rd Fl, San Francisco,
California 94105 or by calling (415) 901-7000.

We plan to post on our website at the address described above future amendments and waivers of our Code

of Conduct as permitted under applicable NYSE and SEC rules.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to information contained in the

Proxy Statement, including “Compensation Discussion and Analysis,” “Committee Reports,” “Directors and
Corporate Governance” and “Executive Compensation and Other Matters.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference to information contained in the
Proxy Statement, including “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters” and “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

INDEPENDENCE

The information required by this Item is incorporated herein by reference to information contained in the

Proxy Statement, including “Directors and Corporate Governance” and “Employment Contracts and Certain
Transactions.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference to information contained in the

Proxy Statement, including “Ratification of Appointment of Independent Auditors.”

120

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of this Annual Report on Form 10-K:

1. Financial Statements: The information concerning our financial statements, and Report of

Independent Registered Public Accounting Firm required by this Item is incorporated by reference herein to
the section of this Annual Report on Form 10-K in Item 8, entitled “Consolidated Financial Statements and
Supplementary Data.”

2. Financial Statement Schedules: Schedule II Valuation and Qualifying Accounts is filed as part of

this Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial
Statements and Notes thereto.

The Financial Statement Schedules not listed have been omitted because they are not applicable or are

not required or the information required to be set forth herein is included in the Consolidated Financial
Statements or Notes thereto.

3. Exhibits: See “Index to Exhibits.”

(b) Exhibits. The exhibits listed below in the accompanying “Index to Exhibits” are filed or incorporated by

reference as part of this Annual Report on Form 10-K.

(c) Financial Statement Schedules.

121

salesforce.com, inc.

Schedule II Valuation and Qualifying Accounts
(in millions)

Description

Balance at
beginning of
year

Additions

Deductions
write-offs

Balance at
end of year

Fiscal year ended January 31, 2020

Allowance for doubtful accounts . . . . . . . . . .

Fiscal year ended January 31, 2019

Allowance for doubtful accounts . . . . . . . . . .

Fiscal year ended January 31, 2018

Allowance for doubtful accounts . . . . . . . . . .

$22

$21

$12

$25

$19

$31

$(24)

$(18)

$(22)

$23

$22

$21

ITEM 16. 10-K SUMMARY

Omitted at registrant’s option.

122

Exhibit
No.

2.1

2.2

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

Index to Exhibits

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

Exhibit Description

Agreement and Plan of Merger, dated as of
March 20, 2018, by and among
salesforce.com, inc., Malbec Acquisition
Corp. and MuleSoft, Inc.

Agreement and Plan of Merger, dated as of
June 9, 2019, by and among
salesforce.com, inc., Sausalito Acquisition
Corp. and Tableau Software, Inc.

Amended and Restated Certificate of
Incorporation of salesforce.com, inc.

Amended and Restated Bylaws of
salesforce.com, inc.

Specimen Common Stock Certificate

Indenture, dated April 11, 2018, between
the Company and U.S. Bank National
Association, as trustee

First Supplemental Indenture, dated
April 11, 2018, between the Company and
U.S. Bank National Association, as trustee

Form of 2023 Notes

Form of 2028 Notes

Description of Common Stock

X

Form of Indemnification Agreement
between salesforce.com, inc. and its
officers and directors

Amended and Restated 2013 Equity
Incentive Plan

Amended and Restated 2004 Employee
Stock Purchase Plan

8-K

001-32224

2.1

3/21/2018

8-K

001-32224

2.1

6/10/2019

8-K

001-32224

3.1

6/7/2019

8-K

001-32224

S-1/A 333-111289

3.2

4.2

6/7/2019

4/20/2004

8-K

001-32224

4.1

4/11/2018

8-K

8-K

8-K

001-32224

001-32224

001-32224

4.2

4.2

4.2

4/11/2018

4/11/2018

4/11/2018

S-1/A 333-111289

10.1

4/20/2004

8-K

001-32224

10.1

6/7/2019

8-K

001-32224

10.2

6/7/2017

MetaMind, Inc. 2014 Stock Incentive Plan

S-8

333-211510

4.1

5/20/2016

S-8

333-213685

4.3

6/7/2019

2014 Inducement Equity Incentive Plan, as
amended

Related forms of equity agreements under
the Amended and Restated 2014
Inducement Equity Incentive Plan

Related forms of equity agreements under
the Amended and Restated 2013 Equity
Incentive Plan

Related forms of equity agreements under
the Amended and Restated 2004 Employee
Stock Purchase Plan

X

X

X

123

Exhibit
No.

10.9*

10.10*

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

Exhibit Description

Optimizer TopCo S.A.R.L. 2015 Share
Incentive Plan.

Gratitude Bonus Plan, as amended and
restated August 21, 2019, effective
August 21, 2019

Form of Offer Letter for Executive
Officers and schedule of omitted details
thereto

Employment Offer Letter, dated May 2,
2013 between salesforce.com, inc. and
Keith Block

Employment Offer Letter, dated June 11,
2014, between salesforce.com, inc. and
Mark Hawkins

Form of Change of Control and Retention
Agreement as entered into with Marc
Benioff

Form of Change of Control and Retention
Agreement as entered into on or prior to
2014 with Parker Harris, Keith Block,
Mark Hawkins, Alex Dayon and Joe
Allanson

Form of Change of Control and Retention
Agreement entered into with non-CEO
Executive Officers after 2014

10.17*

Salesforce Tableau Equity Incentive Plan

10.18*

10.19*

10.20

10.21

10.22

Founder Restricted Stock Agreement

Non-Employee Director Compensation
Program and related form of Director RSU
Agreement

Office Lease dated as of April 10, 2014 by
and between salesforce.com, inc. and
Transbay Tower LLC

Purchase and Sale Agreement, dated
November 10, 2014, between
salesforce.com, inc. and 50 Fremont
Tower, LLC

Amended and Restated Credit Agreement,
dated as of July 7, 2016, by and among
salesforce.com, inc., the subsidiaries of the
Company party thereto as guarantors, the
lenders from time to time thereto and
Wells Fargo Bank, N.A., as Administrative
Agent

124

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

S-8

333-234072

4.3

10/3/2019

10-Q

001-32224

10.4

8/23/2019

10-K

001-32224

10.11

3/9/2012

8-K

001-32224

10.1

6/11/2013

8-K

001-32224

10.1

6/30/2014

10-K

001-32224

10.13

3/9/2009

10-K

001-32224

10.14

3/9/2009

S-8
POS 333-232530

4.4

8/1/2019

10-Q

001-32224

10.2

5/30/2014

10-Q

001-32224

10.2

11/26/2014

8-K

001-32224

10.2

7/11/2016

X

X

X

Exhibit
No.

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

Exhibit Description

Tender and Support Agreement, dated as
of March 20, 2018, by and among
salesforce.com, inc., Malbec Acquisition
Corp. and Lightspeed Venture Partners
Select, L.P., Lightspeed Venture Partners
VII, L.P., New Enterprise Associates 15,
L.P., New Enterprise Associates 14, L.P.,
NEA 15 Opportunities Fund, L.P. and
NEA Ventures 2013, L.P.

Tender and Support Agreement, dated as
of March 20, 2018, by and among
salesforce.com, inc., Malbec Acquisition
Corp., Matthew Langdon, Ann Winbald,
Gregory Schott, Little Family 1995 TR,
Ravi Mhatre, Mhatre Investments LP-Fund
4, Simon Parmett, Robert Horton and Ross
Mason.

Second Amended and Restated Credit
Agreement, dated as of April 30, 2018,
among the Company, the lenders and other
parties party thereto, and Wells Fargo
Bank, National Association, as
Administrative Agent, Swingline Lender
and an Issuing Lender.

Amended and Restated Credit Agreement,
dated as of April 30, 2018, among the
Company, the lenders and other parties
party thereto, and Bank of America, N.A.,
as Administrative Agent.

Credit Agreement, dated as of April 30,
2018, among the Company, the lenders
and other parties party thereto, and Bank
of America, N.A., as Administrative
Agent.

Settlement Agreement between
salesforce.com, inc. and BNP Paribas,
dated June 12, 2018

Settlement Agreement between
salesforce.com, inc. and Bank of America,
N.A., dated June 12, 2018

Settlement Agreement between
salesforce.com, inc. and Morgan
Stanley & Co. International plc, dated
June 12, 2018

125

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

8-K

001-32224

10.1

3/21/2018

8-K

001-32224

10.2

3/21/2018

8-K

001-32224

10.1

4/30/2018

8-K

001-32224

10.2

4/30/2018

8-K

001-32224

10.3

4/30/2018

8-K

001-32224

10.1

6/15/2018

8-K

001-32224

10.2

6/15/2018

8-K

001-32224

10.3

6/15/2018

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

8-K

001-32224

10.1

6/10/2019

X

X

X

X

X

X

Exhibit
No.

10.31*

21.1

23.1

24.1

31.1

31.2

32.1

Exhibit Description

Letter Agreement, dated as of June 9,
2019, by and among salesforce.com, inc.,
Sausalito Acquisition Corp. and Christian
Chabot, Patrick Hanrahan and Christopher
Stolte.

List of Subsidiaries

Consent of Independent Registered Public
Accounting Firm

Power of Attorney (incorporated by
reference to the signature page of this
Annual Report on Form 10-K)

Certification of Chief Executive Officer,
Marc Benioff, 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

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

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

101.INS

Inline XBRL Instance Document

101.SCH

101.CAL

Inline XBRL Taxonomy Extension
Schema Document

Inline XBRL Taxonomy Extension
Calculation Linkbase Document

101.DEF

Inline XBRL Extension Definition

101.LAB

101.PRE

104

Inline XBRL Taxonomy Extension Label
Linkbase Document

Inline XBRL Taxonomy Extension
Presentation Linkbase Document

The cover page from the Company’s
Annual Report on Form 10-K for the year
ended January 31, 2020, formatted in
Inline XBRL (included in Exhibit 101).

* Indicates a management contract or compensatory plan or arrangement.

126

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.

SIGNATURES

Dated: March 5, 2020

Dated: March 5, 2020

salesforce.com, inc.

By:

/S/ MARK J. HAWKINS
Mark J. Hawkins
President and
Chief Financial Officer
(Principal Financial Officer)

salesforce.com, inc.

By:

/S/

JOE ALLANSON
Joe Allanson
Executive Vice President,
Chief Accounting Officer
and Corporate Controller
(Principal Accounting Officer)

127

POWER OF ATTORNEY AND SIGNATURES

KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below

constitutes and appoints Marc Benioff, Mark J. Hawkins, Joe Allanson and Amy Weaver, his or her
attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any
amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has

been signed below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.

Signature

Title

Date

/s/ Marc Benioff
Marc Benioff

/s/ Mark J. Hawkins
Mark J. Hawkins

/s/

Joe Allanson

Joe Allanson

/s/ Craig Conway
Craig Conway

/s/ Parker Harris
Parker Harris

/s/ Alan Hassenfeld
Alan Hassenfeld

/s/ Neelie Kroes
Neelie Kroes

/s/ Colin Powell
Colin Powell

/s/ Sanford R. Robertson
Sanford R. Robertson

/s/

John V. Roos

John V. Roos

/s/ Robin Washington
Robin Washington

Chair of the Board and Chief

March 5, 2020

Executive Officer (Principal
Executive Officer)

President and Chief Financial
Officer (Principal Financial
Officer)

March 5, 2020

Executive Vice President, Chief

March 5, 2020

Accounting Officer and
Corporate Controller (Principal
Accounting Officer)

Director

March 5, 2020

Director, Co-Founder and Chief

March 5, 2020

Technology Officer

Director

Director

Director

Director

Director

Director

128

March 5, 2020

March 5, 2020

March 5, 2020

March 5, 2020

March 5, 2020

March 5, 2020

Signature

Title

Date

/s/ Maynard Webb
Maynard Webb

/s/ Susan Wojcicki
Susan Wojcicki

Director

Director

March 5, 2020

March 5, 2020

129

[THIS PAGE INTENTIONALLY LEFT BLANK]

(cid:91)(cid:4)(cid:60)(cid:26)(cid:91)(cid:36)(cid:73)(cid:87)(cid:16)(cid:26)(cid:3)(cid:36)(cid:73)(cid:87)(cid:66)(cid:3)(cid:281)(cid:280)(cid:384)(cid:58)

Board of Directors

Marc Benioff 

Craig Conway 

Parker Harris(cid:3)

Chair of the Board of Directors & Chief Executive Officer

Former Chief Executive Officer, PeopleSoft, Inc.

(cid:16)(cid:202)(cid:384)(cid:36)(cid:202)(cid:232)(cid:195)(cid:148)(cid:152)(cid:216)(cid:3)(cid:447)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:98)(cid:152)(cid:142)(cid:168)(cid:195)(cid:202)(cid:188)(cid:202)(cid:163)(cid:250)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)

Alan Hassenfeld 

Director, Hasbro, Inc.

Neelie Kroes 

Colin Powell(cid:3)

Former Vice President of the European Commission

(cid:37)(cid:152)(cid:195)(cid:152)(cid:216)(cid:130)(cid:188)(cid:369)(cid:3)(cid:36)(cid:202)(cid:216)(cid:194)(cid:152)(cid:216)(cid:3)(cid:103)(cid:364)(cid:91)(cid:364)(cid:3)(cid:91)(cid:152)(cid:142)(cid:216)(cid:152)(cid:227)(cid:130)(cid:216)(cid:250)(cid:3)(cid:202)(cid:162)(cid:3)(cid:91)(cid:227)(cid:130)(cid:227)(cid:152)(cid:369)(cid:3)(cid:36)(cid:202)(cid:216)(cid:194)(cid:152)(cid:216)(cid:3)(cid:16)(cid:168)(cid:130)(cid:171)(cid:216)(cid:194)(cid:130)(cid:195)(cid:359)(cid:3)(cid:56)(cid:202)(cid:171)(cid:195)(cid:227)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:220)(cid:3)(cid:202)(cid:162)(cid:3)(cid:91)(cid:227)(cid:130)(cid:162)(cid:162)

Sanford Robertson 

Principal, Francisco Partners

John V. Roos(cid:3)

(cid:3)(cid:36)(cid:202)(cid:216)(cid:194)(cid:152)(cid:216)(cid:3)(cid:103)(cid:364)(cid:91)(cid:364)(cid:3)(cid:4)(cid:194)(cid:141)(cid:130)(cid:220)(cid:220)(cid:130)(cid:148)(cid:202)(cid:216)(cid:3)(cid:227)(cid:202)(cid:3)(cid:56)(cid:130)(cid:213)(cid:130)(cid:195)(cid:369)(cid:3)(cid:16)(cid:202)(cid:384)(cid:36)(cid:202)(cid:232)(cid:195)(cid:148)(cid:152)(cid:216)(cid:359)(cid:3)(cid:37)(cid:152)(cid:202)(cid:148)(cid:152)(cid:220)(cid:171)(cid:142)(cid:3)(cid:16)(cid:130)(cid:213)(cid:171)(cid:227)(cid:130)(cid:188)(cid:369)(cid:3)(cid:22)(cid:171)(cid:216)(cid:152)(cid:142)(cid:227)(cid:202)(cid:216)(cid:359)(cid:3) 

(cid:91)(cid:202)(cid:195)(cid:250)(cid:3)(cid:16)(cid:202)(cid:216)(cid:213)(cid:202)(cid:216)(cid:130)(cid:227)(cid:171)(cid:202)(cid:195)

Robin Washington 

 Former Executive Vice President & Chief Financial Officer, Gilead Sciences, Inc.;  

Director, Alphabet, Inc.

Maynard Webb(cid:3)

Susan Wojcicki 

(cid:36)(cid:202)(cid:232)(cid:195)(cid:148)(cid:152)(cid:216)(cid:359)(cid:3)(cid:115)(cid:152)(cid:141)(cid:141)(cid:3)(cid:45)(cid:195)(cid:243)(cid:152)(cid:220)(cid:227)(cid:194)(cid:152)(cid:195)(cid:227)(cid:3)(cid:67)(cid:152)(cid:227)(cid:244)(cid:202)(cid:216)(cid:185)(cid:369)(cid:3)(cid:16)(cid:202)(cid:384)(cid:36)(cid:202)(cid:232)(cid:195)(cid:148)(cid:152)(cid:216)(cid:359)(cid:3)(cid:26)(cid:243)(cid:152)(cid:216)(cid:244)(cid:171)(cid:220)(cid:152)(cid:369)(cid:3)(cid:22)(cid:171)(cid:216)(cid:152)(cid:142)(cid:227)(cid:202)(cid:216)(cid:359)(cid:3)(cid:114)(cid:171)(cid:220)(cid:130)(cid:359)(cid:3)(cid:45)(cid:195)(cid:142)(cid:364)(cid:3)

Chief Executive Officer, YouTube, Inc.

Executive Team

Marc Benioff 

Joe Allanson(cid:3)

Chair of the Board of Directors & Chief Executive Officer

(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:4)(cid:142)(cid:142)(cid:202)(cid:232)(cid:195)(cid:227)(cid:171)(cid:195)(cid:163)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)(cid:3)(cid:447)(cid:3)(cid:16)(cid:202)(cid:216)(cid:213)(cid:202)(cid:216)(cid:130)(cid:227)(cid:152)(cid:3)(cid:16)(cid:202)(cid:195)(cid:227)(cid:216)(cid:202)(cid:188)(cid:188)(cid:152)(cid:216)

Alexandre Dayon(cid:3)

(cid:84)(cid:216)(cid:152)(cid:220)(cid:171)(cid:148)(cid:152)(cid:195)(cid:227)(cid:3)(cid:447)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:91)(cid:227)(cid:216)(cid:130)(cid:227)(cid:152)(cid:163)(cid:250)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)

Parker Harris(cid:3)

Mark Hawkins 

Brent Hyder 

(cid:16)(cid:202)(cid:384)(cid:36)(cid:202)(cid:232)(cid:195)(cid:148)(cid:152)(cid:216)(cid:3)(cid:447)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:98)(cid:152)(cid:142)(cid:168)(cid:195)(cid:202)(cid:188)(cid:202)(cid:163)(cid:250)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)

President & Chief Financial Officer

President & Chief People Officer

Srinivas Tallapragada(cid:3)(cid:3)

(cid:84)(cid:216)(cid:152)(cid:220)(cid:171)(cid:148)(cid:152)(cid:195)(cid:227)(cid:3)(cid:447)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:26)(cid:195)(cid:163)(cid:171)(cid:195)(cid:152)(cid:152)(cid:216)(cid:171)(cid:195)(cid:163)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)

Bret Taylor(cid:3)

Amy Weaver(cid:3)

(cid:84)(cid:216)(cid:152)(cid:220)(cid:171)(cid:148)(cid:152)(cid:195)(cid:227)(cid:3)(cid:447)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:73)(cid:213)(cid:152)(cid:216)(cid:130)(cid:227)(cid:171)(cid:195)(cid:163)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)

(cid:84)(cid:216)(cid:152)(cid:220)(cid:171)(cid:148)(cid:152)(cid:195)(cid:227)(cid:359)(cid:3)(cid:16)(cid:168)(cid:171)(cid:152)(cid:162)(cid:3)(cid:60)(cid:152)(cid:163)(cid:130)(cid:188)(cid:3)(cid:73)(cid:162)(cid:162)(cid:171)(cid:142)(cid:152)(cid:216)(cid:3)(cid:447)(cid:3)(cid:91)(cid:152)(cid:142)(cid:216)(cid:152)(cid:227)(cid:130)(cid:216)(cid:250)

Investor Relations 

investor@salesforce.com, +1-415-536-6250

Stock Listing 

Salesforce trades on the New York Stock Exchange 
under the ticker symbol “CRM.”

Note on Forward-Looking Statements
This annual report contains forward-looking statements within the meaning of the federal securities laws.  Actual results could differ 
materially from those expressed in such statements. Further information on factors that could affect results is included in the fiscal 
2020 Form 10-K, included in this annual report.

 
WORLDWIDE CORPORATE HEADQUARTERS
salesforce.com, inc.
Salesforce Tower
415 Mission Street, 3rd Floor
San Francisco, CA 94105, USA
1-800-NO-SOFTWARE

www.salesforce.com   |         /salesforce   |          @salesforce

© 2020 salesforce.com, inc. All rights reserved. Salesforce and salesforce.com are registered trademarks of salesforce.com, inc.
Salesforce owns other registered and unregistered trademarks. Other names used herein may be trademarks of their respective owners.