Salesforce.com Annual Report 2021

FY2021 Annual Report · Salesforce.com

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FY21
Annual Report
Success from
Anywhere

The world changed dramatically last
year. And Salesforce quickly evolved
the way we work together, while
helping businesses of every size meet
unexpected challenges, operate more
safely, and succeed from anywhere.

We are committed to equality and
community because our business is
most successful when our communities
thrive and opportunity is ensured for
all people. Together our employees,
customers, shareholders, Trailblazers,
and partners are building a better
world, and we are grateful for each
and every one of you.

FY21
Highlights

Remaining Performance Obligation,1 up 17% year over year

of the Fortune 500 are Salesforce customers

Full Year Operating Cash Flow, up 11% year over year

Hours contributed to the community since inception

Employees

56,000+
90%
5 million+

FY21 Revenue, up 24% year over year

$21.3 billion
$36.1 billion
$4.8 billion

1 “Remaining Performance Obligation” represents all future revenue
under contract that has not yet been recognized as revenue and
includes unearned revenue and unbilled amounts.

Fellow Shareholders,

The past year has tested us like never before—as individuals, as a company,
as communities, and as a global family. We are filled with gratitude to all the
frontline and essential workers who have risked their lives to protect ours.
We hope you and your families are staying safe and healthy, and our hearts
go out to everyone who has lost a loved one or friend to this terrible pandemic.

Vaccines give us hope for the future, but COVID-19 has changed our lives
forever. Last year, we were thrust into an all-digital, work-from-anywhere world.
As nearly 57,000 global employees continue to work from home, we’ve become
a leader in working from anywhere. Guided by our core values—Trust, Customer
Success, Innovation and Equality—we have become more strategic and
relevant to our customers than ever.

Put simply, Salesforce is the success from anywhere company.

By helping our customers achieve success from anywhere, we delivered
another record year—$21.3 billion in fiscal year 2021, up 24% over last year.
Even at our scale, Salesforce remains the fastest-growing enterprise software
company in the world. We’re the #1 CRM platform, #1 in Analytics with
Tableau and #1 in Integration with MuleSoft. This coming year, we expect
to surpass $25 billion in revenue, on our way to our goal of $50 billion in the
next five years.

Our exceptional growth last year is rooted in our own example—how we
transformed our company and achieved success from anywhere right here
at Salesforce. When the pandemic hit, we pivoted and developed a new
operating model. We used Sales Cloud to engage with our customers from
anywhere—having millions of conversations to ensure we remain relevant to
their success. We used Marketing Cloud to market from anywhere, creating
new digital experiences like Dreamforce to You and hundreds of leadership
events that have been viewed nearly 500 million times. We built an incredible
new platform, Hyperforce—with new data centers opened in India and
Germany, and 10 more planned for this year—allowing our customers to
manage their data from anywhere.

With Service Cloud, we managed our own caseload as our business continued
to accelerate throughout the year, and as a customer of Slack we used Service
Cloud with Slack to improve case time close rate by 26%. Slack is the central
nervous system for the new world of work—connecting people and data across
systems, apps and devices from anywhere. After we close the acquisition, we’ll
build Slack into our products and help our customers become even more
productive from anywhere. And we’re going to create the most open and
interoperable ecosystem of apps and workflows in enterprise software.

We’re helping our customers find success from anywhere as well. No other
company offers the flexibility, scale and time to value of Customer 360,
allowing organizations to work, sell, service, market, collaborate, and analyzeze
data from anywhere. Around the world, companies such as AT&T, 3M, ZooZoom,
VF Corporation, Humana, GAP, and Align Technology are turning to Salesesforce
to build direct, trusted customer relationships and power their digitital
transformations, making Salesforce the #1 CRM for the seventh yeaear in a
row, as ranked by IDC.

This year, delivering success from anywhere also meant developping new
technologies—like contact tracing, Work.com and Vaccine Clouud—to help
companies and governments beat back the pandemic. More tthan 150
international, federal, state and local government agencies, annd healthcare
organizations, are using Salesforce technology for vaccine management and
COVID-19 tracking. More than 245 million people around thee world have
accessed COVID-19 data through our Tableau dashboards, annd thousands
of organizations are relying on Tableau’s COVID-19 data hub.

Our success this year also allowed us to do even more to serve alll of our
stakeholders. We delivered 50 million pieces of personal protectiveve equipment
to more than 300 hospitals around the world to help first responderers, doctors,
and nurses care for patients during the pandemic. We donated more e than
$30 million to support response efforts across some of the hardest hit ct cities
around the world. We’ve partnered with Gavi, the Vaccine Alliance, on eququitable
a
dis
Trai
new

istribution of vaccines across 190 countries. We’re equipping millions of
ailblazers globally with the skills they need to compete for the 4.2 million
w jobs the Salesforce ecosystem is expected to create by 2024.

we respond to the pandemic, we continue to live our core values, including
commitment to equality. As systemic racism and violence against the Black
munity rose to the forefront last year, we established a new—Racial Equality
Justice Taskforce to drive systemic change across four areas—people,
chasing, philanthropy, and policy. Last year, we added two new leadership
d overall representation goals, committing to double the U.S. representation
Black employees in leadership (VP+) and increase our U.S. representation

As w
our c
comm
and J
purc
and
of B
of underrepresented minority (Black, Indigenous, Latinx, and Multiracial)
of
e
employees by 50% by fiscal 2024.

We’re also working toward our goal set forth in fiscal 2020 of ensuring that
underrepresented groups (women, Black, Latinx, Indigenous, Multiracial,
LGBTQ+, People with Disabilities, and Veterans) make up half of our U.S.
workforce by fiscal 2024. Over the next five years, we will invest $200
million and 1 million volunteer hours with organizations working to advance
racial equality and justice at the global, national, and local level. We are also

More than 150
international, federal,
state and local
government agencies,
and healthcare
organizations, are
using Salesforce
technology for vaccine
management and
COVID-19 tracking.

Last year... we
contributed nearly
$100 million to our local
communities, bringing
our corporate giving
since our founding to
approximately $430
million in grants.
This includes more
than $120 million to
support education
with a new focus on
distance learning
during the pandemic.

committing to spe
million on minority-o
advocate for police refo
policies. We realize that eve
so much more to do to ensur

spend $100 million on Black-owned businesses and $100

ty-owned companies by fiscal 2024. We also continue to

eform, civic engagement, and economic empowerment

every institution and company, including Salesforce, has
ure equality in our workplaces and across the globe.

to be a global leader in investing in our

for all people. Our businesses cannot be

All told, Salesforce continues to
communities and opportunity fo
successful without helping our com
we truly serve all stakeholders bus
Last year, together with the Salesfo
organization, we contributed nearly $
bringing our corporate giving since ou
in grants. This includes more than $1
new focus on distance learning durin
5.7 million hours, and, in the last yea
billion in free and discounted techno

mmunities become more successful. When
siness is the greatest platform for change.
orce Foundation, a 501(c)(3) non-profit
$100 million to our local communities,
ur founding to approximately $430 million
120 million to support education with a
ng the pandemic. We have volunteered
ar alone, we donated approximately $1.4
ology for nonprofits and schools.

I’m especially proud of our efforts
operations company, all of our pr
reduced our market-based carb
on track to reach 100% renew
helped to plant 10 million tre
and grow 100 million tree
Economic Forum’s 1T.o
platform Uplink, we’r
around the world
to drive susta

ustainability.

s on behalf of the planet. As a net-zero
products are carbon neutral. Last year, we
bon footprint by 40 percent, and we remain
ewable energy by fiscal 2022. We have now
trees, part of our commitment to conserve, restore

ees over the next decade in support of the World

T.org initiative. As a founding sponsor of the global
we’re helping connect more than 10,000 ecopreneurs
orld as they develop the next generation of innovative solutions

None of this success would be possible without you—our shareholders. Thank
you for continuing to place your trust in Salesforce. As hard as the past year
has been, I remain as optimistic as ever about the future of Salesforce and
our ability to achieve success from anywhere—because we’re building that
future with you.

Thank you,

Marc Benioff
Chair and CEO
Salesforce

Doing Well and
Doing Good, Together

By sticking to our values, we managed
to make FY21 another great year.
A big thank you to everyone who made
these accolades possible.

Leader in
Philanthropy

Leader in
Culture

Leader in
Innovation

TOP 50
COMPANIES
THAT CARE

MOST
SUSTAINABLE
COMPANIES

WORLD’S
MOST ADMIRED

CHANGE THE
WORLD LIST

WORLD’S
BEST WORKPLACE

FUTURE 5O
TOP 10

P O

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, 2021
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 has filed a report on and attestation of the effectiveness of its internal control over financial

reporting under Section 404(b) of Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by registered public accounting firm that prepared or issued its audit
report È

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, 2020, the aggregate market value of its shares (based on a closing price of $194.85 per share) held by non-affiliates was
approximately $139.6 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 March 15, 2021, there were approximately 921 million shares of the Registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for its 2021 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within
120 days of the Registrant’s fiscal year ended January 31, 2021, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . .
Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
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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,” “commitments,” 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, industry prospects and
the anticipated impact on our business of the ongoing COVID-19 pandemic and related public health measures.
These forward-looking statements are based on current expectations, estimates and forecasts, as well as the
beliefs and assumptions of our management, and are subject to risks and uncertainties that are difficult to
predict, including: the impact of, and actions we may take in response to, the COVID-19 pandemic, related
public health measures and resulting economic downturn and market volatility; our ability to maintain security
levels and service performance meeting the expectations of our customers, and the resources and costs required
to avoid unanticipated downtime and prevent, detect and remediate performance degradation and security
breaches; the expenses associated with our data centers and third-party infrastructure providers; our ability to
secure 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; current and potential litigation involving us or our industry,
including litigation involving acquired entities such as Tableau, and the resolution or settlement thereof;
regulatory developments and regulatory investigations involving us or affecting our industry; our ability to
successfully introduce new services and product features, including any efforts to expand our services; the
success of our strategy of acquiring or making investments in complementary businesses, joint ventures, services,
technologies and intellectual property rights; our ability to complete, on a timely basis or at all, announced
transactions, including our proposed acquisition of Slack Technologies, Inc.; our ability to realize the benefits
from acquisitions, strategic partnerships, joint ventures and investments; our ability to successfully integrate
acquired businesses and technologies; our ability to compete in the market in which we participate; the success
of our business strategy and our plan to build our business, including our strategy to be a 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 ability to limit customer
attrition and costs related to those efforts; the success of 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 ability to preserve our workplace culture, including as a result of our
decisions regarding our current and future office environments or work-from-home policies; our dependency on
the development and maintenance of the infrastructure of the Internet; our real estate and office facilities
strategy and related costs and uncertainties; fluctuations in, and our ability to predict, our operating results and
cash flows; the variability in our results arising from the accounting for term license revenue products; 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; uncertainties regarding the effect of general economic and market conditions; the impact
of geopolitical events; uncertainties regarding the impact of expensing stock options and other equity awards;
the sufficiency of our capital resources; risks related to the availability and funding of our bridge loan facility
and term loan associated with our proposed acquisition of Slack Technologies, Inc. and other indebtedness; our
ability to comply with our debt covenants and lease obligations; and the impact of climate change, natural
disasters and actual or threatened public health emergencies, including the ongoing COVID-19 pandemic. 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.

ITEM 1. BUSINESS

Overview

PART I.

Salesforce is a global leader in customer relationship management (“CRM”) technology that brings
companies and their customers together. With our Customer 360 platform, we deliver a single source of truth,
connecting customer data across systems, apps and devices to help companies sell, service, market and conduct
commerce from anywhere. Since its founding in 1999, Salesforce has pioneered innovations in cloud, mobile,
social, analytics and artificial intelligence (“AI”), enabling companies of every size and industry to transform
their businesses in the all-digital, work-from-anywhere era.

Our Customer 360 service offerings are designed to be flexible, scalable and easy to use. They can generally
be configured easily, rapidly deployed 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. We also enable third parties to use our platform and developer tools to create additional
functionality and new applications that run on our platform, which are sold separately from, or in conjunction
with, our service offerings.

In addition to organic innovation, we add new capabilities to our Customer 360 platform through

acquisitions. For example, in fiscal 2021, we acquired Vlocity, Inc. (“Vlocity”), an industry-specific cloud and
mobile software solutions company. We also signed a definitive agreement to acquire Slack Technologies, Inc.
(“Slack”), a leading channel-based messaging platform, which is expected to close in the second quarter of fiscal
2022.

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, compliance and availability at scale. Customer success is at
the core of our business and we align the entire company around our customers’ needs to ensure their success and
prove our value. We believe in continuous innovation, enabling our customers to access the latest technology
advances so they can innovate, build and stay ahead in their industries. Finally, equality is a core tenet of how we
run our business. We value the equality of every individual at our company and in our community. We believe
that creating a diverse workplace that reflects the communities we serve and fostering an inclusive culture where
everyone feels seen, heard and valued makes us a better company.

We believe that our values create value, and 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 giving back to our communities, closing the inequality
gap and helping businesses grow while protecting the environment for future generations. We believe we have a
broad responsibility to society, and we aspire to create a framework for the ethical and humane use of technology
that not only drives the success of our customers, but also upholds the basic human rights of every individual.
We are committed to transparent environmental, social and governance disclosures and maintaining programs
that support the success of these initiatives.

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

Today, global challenges require businesses to digitally transform while leveraging customer data to become

more responsive, resilient and efficient. We believe it has become imperative for companies across every
industry to connect with their customers through digital channels.

Our industry-leading Customer 360 platform is an integrated, AI-powered CRM platform spanning sales,

service, marketing, commerce and more. It allows our customers to unlock the value of their customer data
across their businesses and quickly adapt to customer and employee needs in the all-digital, work-from-anywhere
world. With Customer 360, our customers can take advantage of pervasive AI, analytics and collaboration
capabilities, and industry-leading trust, security and availability with built-in compliance, integrated platform
services and automatic upgrades. Our customers can select from the right mix of our solutions for any team, in
any industry and for companies of any size, to get a single source of truth and complete view of their customers.

Customer 360 service offerings are designed to work together, and include:

Sales. Sales empowers sales teams of companies of every size and industry to manage and automate their
entire sales process from leads to opportunities to billing, allowing them to sell faster, smarter and in the
way they want. Our customers use our Sales offering to store data, monitor leads and progress, forecast
opportunities, gain insights through analytics and relationship intelligence and deliver quotes, contracts
and invoices.

Service. Service enables companies to deliver trusted and highly personalized customer service and
support at scale. Our customers use our Service offering to connect their service agents with customers
anytime and anywhere, across any touchpoint from the phone to digital channels to self-service portals,
with connected omnichannel engagement. Our Service offering also helps our customers’ customers
resolve top, routine issues with predictions, recommendations and chatbots across digital channels. In
addition, Service 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.

Digital 360: Marketing and Commerce.

Marketing. Our Marketing service offering enables companies to plan, personalize and optimize
one-to-one customer marketing journeys, including interactions across email, mobile, social, web and
connected products. Marketing enables our customers to provide an integrated customer experience
across their customers’ journey with real-time personalization. With our Marketing offering, customer
data can also be integrated with our Sales offering and our Service offering in the form of leads, contacts
and customer service cases to give companies a single source of truth for their customers.

Commerce. Our Commerce service offering empowers brands to unify the customer experience across all
points of commerce, including mobile, web, social and store. Through personalized shopping experiences
and a robust partner ecosystem, our Commerce offering helps companies drive increased engagement,
conversion, loyalty and revenue from their customers.

Experience. Our Experience service offering, formerly Community, allows companies to quickly engage
any audience with sites, forums and apps. Experience enables companies to create and manage trusted,
branded digital destinations for customers, partners and employees. Experience also enables companies
engage and collaborate directly with groups of people by giving them access to relevant information, apps
and experts.

Platform and Other.

Platform. Our Platform service offering is an easy, flexible platform that enables companies of all sizes,
locations and industries to build business apps to bring them closer to their customers with drag-and-drop
tools. It is an agile and trusted way for enterprises to innovate and deliver digital transformation at scale.
Platform offers industry-leading trust, security and availability, built-in compliance, integrated platform
services and automatic upgrades. 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 Platform. With myTrailhead, customers can personalize Trailhead for their business to empower
learning and enablement at their company.

Analytics. Our Analytics service offering, including Tableau, provides customers advanced analytics
solutions with an end-to-end analytics solution serving a broad range of enterprise use cases. Analytics
offers customers intelligent analytics capabilities to better understand their business data. By providing
self-service data preparation and analytical technology to customers, Analytics is designed to improve our
customers’ decision-making and allow customers to take action from any device.

Integration. Our Integration service offering, powered by MuleSoft, makes it easy to connect data from
any system to deliver truly connected experiences. MuleSoft helps our customers unlock, unify and
secure their data, use discoverable, reusable APIs and integrations and increase their speed and agility to
quickly create connected experiences. MuleSoft allows our customers to unlock data across their
enterprise, which can create new revenue opportunities, increase operational efficiency and create
differentiated customer experiences.

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 and education and non-profit, as well as customers of every
size with offerings such as Essentials for small business.

Business Benefits of Using Our Solutions

The key advantages of our solutions include the following:

•

an industry-leading CRM integrated platform for business-to-business, business-to-consumer and
business-to-employee commerce and enterprise application marketplace for the all-digital, work-from-
anywhere world;

scalable and flexible solutions for any size company or industry;

a single source of truth that connects customer data across systems, apps and devices to help companies
sell, service, market and conduct commerce from anywhere;

the ability to unlock companies’ customer data across their business, see and understand their data with
advanced analytics, make predictions with pervasive AI, automate tasks and personalize every
interaction;

empowering developers and business users to create digital experiences with modern, low-code tools
powered by leading-edge AI and configure and automate business processes to fit the needs of any
business, accelerating time to value;

the ability to accelerate adoption and drive results with purpose-built, compliant tools and processes
that deliver out-of-the-box functionality, security and interoperability; and

a community of over two million Trailblazers: passionate developers, admins and experts who use
Salesforce to innovate and extend the platform with thousands of partner apps.

Our Business and Growth Strategy

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 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
and small businesses. As our customers realize the benefits of our entire suite of 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. We also seek to expand all editions of our service

offerings with new features, functions and increased security through our own development, acquisitions
and partnerships. In addition, we aim to expand our relationships with existing customers through our
additional support offerings. Our goal is to become our customers’ digital trusted advisor, inspiring
enterprise-wide digital transformation and accelerating strategic engagements through direct discussions
with the highest levels of our customers’ executive management.

Extending go-to-market capabilities globally. By extending our go-to-market capabilities globally, we
aim to grow our business by selling to new customers in new regions. 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. We have increased and plan to continue
to increase the number of direct sales professionals we employ. We also plan to continue to develop
indirect distribution channels for our solutions around the globe and new go-to-market strategies. We
continue to increase our investment in our domestic and international operations and infrastructure to
deliver the highest-quality service to our customers around the world.

Expanding into new categories and verticals. As part of our growth strategy, we are delivering
innovative solutions in new categories driven by our existing and potential customers’ needs, including
analytics, e-commerce, collaboration, integration and workforce management, and expect to continue this
type of category expansion in the future. For example, in fiscal 2021, we introduced Work.com in
response to the COVID-19 pandemic. Work.com offers new technology solutions and resources to help
business and community leaders around the world reopen safely, re-skill employees and respond
efficiently on the heels of the pandemic. Work.com also offers employee experience solutions to keep
employees engaged and productive with easy-to-use apps. In addition, 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 and education and non-profit. These solutions help to expand our
potential customer base and help to attract new customers.

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 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, a community of
Trailblazers who drive innovation, 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 aim to reduce attrition and
secure renewals of existing customer subscriptions prior to the end of their contractual terms.

Mergers and Acquisitions and Strategic Investments

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 recent years, notably our
acquisition of Vlocity in fiscal 2021, which expanded our industry-specific cloud and mobile software solutions,
and our pending acquisition of Slack.

In addition to mergers and acquisitions, we invest in early-stage companies to more mature companies both

domestically and internationally to support our business initiatives and enhance our partner 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 and investments in
emerging markets. We plan to continue making these types of strategic investments, including in companies
representing targeted geographies and targeted business and technological initiatives, as opportunities arise that
we find attractive.

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. 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 have historically provided and continue to provide 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 provide our services via cloud computing platform partners who offer
Infrastructure-as-a-Service, including servers, storage, databases and networking. In December 2020, we
announced Hyperforce, a reimagination of our platform architecture built to securely and reliably deliver the
Customer 360 platform on major public clouds.

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, as well as integrating businesses, services and technologies from acquisitions.
Performance, functional depth, security, usability, ease of integration and configuration 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 with low barriers to entry, shifting customer needs and frequent introductions of new
products and services.

Our current competitors include:

•

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

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;

software companies that provide their product or service free of charge as a single product or when
bundled with other offerings, or only charge a premium for advanced features and functionality;

vendors who offer software tailored to specific services that are more directed toward those specific
services than our full suite of service offerings;

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 specialize in advertising, targeting, messaging or campaign automation;

•

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

•

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.

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

competitive threat as they continue to shift more of their focus to cloud computing service offerings and
customer experience management solutions.

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 2021, 2020 or 2019. In addition, we do not have
any material dependencies on any specific product, service or particular group or groups.

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 deployments. We provide best-
practices and AI-based recommendations and adoption programs globally. In addition, we provide advanced
education, including in-person 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.

Sales and Marketing

We sell our services primarily through our direct sales force, which comprises 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 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
services.

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 opportunities. Our primary marketing activities include:

• multichannel marketing campaigns that span email, social media, the web, television and more, which

align to a broader customer journey;

•

in-person and virtual customer events of all sizes to create customer and prospect awareness, including
proprietary events such as Dreamforce and, in fiscal 2021, our virtual Dreamforce to You, World
Tours, and other virtual events, 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 Customer 360 platform;

in-person and virtual 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.

Human Capital Management

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

values are the foundation of our company culture, which we believe is fundamental to, and a competitive
advantage in, our approach to managing our workforce. 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, which
is critical for our continued success. For example, our sales, engineering and customer success teams are critical
to our ability to grow, innovate and ensure the trust and customer success of our customers.

We believe our efforts in managing our workforce have been effective. Our focus on our workplace

environment and a strong company culture has led to recognition across the globe, as evidenced by the following
awards: Fortune World’s Most Admired Companies (2021 and for the seventh year in a row), Fortune 100 Best
Companies to Work (2020 and for the 12th year in a row), Human Rights Campaign Best Places to Work For
LGBTQ Equality (2021), and Glassdoor Employees’ Choice Best Place to Work in Canada, France, Germany,
the United Kingdom, and the United States (2020).

As of January 31, 2021, we had 56,606 employees, of which approximately 58 percent were located in the

United States and 42 percent were located internationally. None of our employees in the United States are
represented by a labor union. However, employees of certain foreign subsidiaries are represented by works
councils.

We focus on equality, diversity and inclusion, development programs and engagement to attract and retain

the best talent. We rely on various initiatives to support these objectives and have programs in place for
intentional recruiting, talent development, employee engagement and ongoing communications and feedback.
Some of our key human capital management initiatives are summarized below:

Equality, Diversity and Inclusion

Equality is a core value at Salesforce. We aim to create a workplace that reflects the diverse communities

we serve and empowers our employees. Our key equality initiatives include: investing in our future leaders,
inclusive hiring and leadership trainings, equal pay for equal work, employee-led resource groups and a focus on
accessibility in our products and workspaces. For example:

• 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. As of January 31, 2021, we had spent
more than $12 million since this program began, to ensure our global workforce is paid fairly. In the
United States we also review differences in pay for gender as well as race and ethnicity.

• We aspire to have 50 percent of our U.S. workforce made up of underrepresented groups for the U.S.
technology industry (“underrepresented groups”), which we define as employees who identify as
Women, Black, Latinx, Indigenous, Multiracial, Lesbian, Gay, Bi-Sexual, Trans, Queer, People with
Disabilities, Veterans, and other groups, by fiscal 2024. As of November 2, 2020, approximately 47%
of our U.S. workforce was made up of underrepresented groups.

• We support 12 employee-led and founded employee resource groups, which provide communities for
underrepresented groups and their allies, offer professional development and mentoring opportunities
and empower employees to be responsive equality leaders in their community.

Talent and Career Development

We offer our employees various talent development programs to create a culture of continuous learning.
Learning and development opportunities include Trailhead, our learning platform available for all employees,
in-person and virtual classes, guides and workbooks and more. We also encourage our employees to seek
personal and professional development opportunities with external organizations and offer yearly education
reimbursement to employees who wish to continue job-related education from accredited institutions or
organizations. For example, over 6,000 employees participated in at least one of our professional development
training programs in fiscal 2021.

Our V2MOM and Code of Conduct

Alignment and consistent and clear communication are a key part of our employee engagement, especially

as we continue to grow. Each year, we complete a corporate V2MOM, which is an internal management tool
used to align the Company on our vision, values, methods, obstacles and measures for the upcoming year. All
employees are then expected to complete their own V2MOM that aligns with the corporate V2MOM. In addition,
our Code of Conduct ensures that our core values remain the foundation of the Company and directly impact our
ability to deliver success. We expect all of our employees to commit to acting with integrity and treating others
with compassion and respect.

Employee Engagement & Satisfaction

Our Employee Opinion Survey is a vehicle for employees to provide confidential feedback on their
experience as Salesforce employees. The results are used to assess employee engagement, our company culture
and our workplace environment. Based on the results of the most recent survey, 95% of responding employees
indicated they were willing to give extra effort to get the job done and over 90% of responding employees
indicated that they would recommend Salesforce as a great place to work.

Response to COVID

In an effort to protect the safety and well-being of our employees, during the outset of the COVID-19

pandemic, we closed our offices around the world during the first quarter of fiscal 2021 and have worked to

address the unique challenges and needs of our employees. Refer to our “Environmental, Social and Governance”
Section in Item 7 of Part II. for additional information on the actions we have taken to support our employees
during the COVID-19 pandemic.

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 and other websites referenced throughout the filing are not incorporated and do not constitute a
part of 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 business, financial condition,
results of operations, cash flows, other key metrics and the trading price of our common stock.

We organize these risks and uncertainties into the following categories: risks related to our business
operations; risks that could affect, or result from, our business strategy and the industry in which we operate;
legal and regulatory risks; financial risks; risks related to the ownership of our common stock; and general risks
that could affect our business.

Risk Factor Summary

Operational and Execution Risks

• The effects of the COVID-19 pandemic and related public health measures on how we and our

customers are operating our businesses.

• Any breaches in 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 that cause unauthorized access to a customer’s data, our data or our IT systems, or the
blockage or disablement of authorized access to our services.

• Any defects or disruptions in our services that diminish demand for our services.

• 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.

• An inability to realize the expected business or financial benefits of company and technology

acquisitions and investments.

• The completion of the proposed acquisition of Slack Technologies, Inc. in the anticipated time frame

and failure to realize the anticipated benefits of the acquisition.

•

Strain on our personnel resources and infrastructure from supporting our existing and growing
customer base or an inability to scale our operations and increase productivity.

• Customers’ non-renewal of or reduction in subscriptions at the time of renewal, or our inability to

accurately predict subscription renewals and upgrade rates.

• Disruptions caused by periodic changes to our sales organization.

• Dependency of our services on the development and maintenance of the infrastructure of the Internet

by third parties.

• Exposure to risks inherent in international operations from sales to customers outside the United States.

• A more time-consuming and expensive sales cycle, pricing pressure, and implementation and
configuration challenges as we target more of our sales efforts at larger enterprise customers.

• Any loss of key members of our management team or development and operations personnel, or

inability to attract and retain employees necessary to support our operations and growth.

• Any failure in our delivery of high-quality technical support services.

Strategic and Industry Risks

• A failure by us to expand our services beyond the CRM market and to develop and integrate our

existing services in order to keep pace with technological developments.

• An inability to maintain and enhance our brands.

•

Partial or complete loss of invested capital, or significant changes in the fair value, of our strategic
investment portfolio.

• Any discontinuance by third-party developers and providers in embracing our technology delivery

model and enterprise cloud computing services, or customers asking us for warranties for third-party
applications, integrations, data and content.

• An inability to compete effectively in the intensely competitive market in which we participate.

•

Social and ethical issues, including the use of AI in our offerings.

Legal and Regulatory Risks

•

Privacy concerns and laws such as the forthcoming California Privacy Rights Act, the California
Consumer Privacy Act and the EU’s General Data Protection Regulation, evolving regulation of cloud
computing, cross-border data transfer restrictions and other domestic or foreign regulations.

• Evolving industry-specific regulation and other requirements and standards and unfavorable industry-

specific laws, regulations, interpretive positions or standards.

• Lawsuits against us by third parties for various claims, including alleged infringement of proprietary

rights.

• Any failure to protect our intellectual property rights.

• Lawsuits filed against us and Slack in connection with the mergers and additional lawsuits that may be

filed in the future.

• Risks related to government contracts and related procurement regulations.

• Governmental export and import controls that could impair our ability to compete in international

markets and may subject us to liability.

Financial Risks

• 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.

•

Significant fluctuations in our rate of anticipated growth and any failure to balance our expenses with
our revenue forecasts.

• Unanticipated changes in our effective tax rate and additional tax liabilities and global tax

developments.

•

Fluctuations in currency exchange rates, particularly the U.S. Dollar versus local currencies and the
Euro versus the British Pound Sterling.

• Our debt service obligations, lease commitments and other contractual obligations.

• Accounting pronouncements and changes in other financial and non-financial reporting standards.

Risks Related to Owning Our Common Stock

•

Fluctuations in our quarterly results.

• Volatility in the market price of our common stock and associated litigation.

•

Provisions in our certificate of incorporation and bylaws and Delaware law that might discourage,
delay or prevent a change of control of our company or changes in our management.

General Risks

• Volatile and significantly weakened global economic conditions.

• The occurrence of natural disasters and other events beyond our control.

• The long-term impact on our business from climate change.

Operational and Execution Risks

The effects of the COVID-19 pandemic and related public health measures have materially affected how we

and our customers are operating our businesses, and have materially affected our operating results and cash
flows; the duration and extent to which this will impact our future results of operations and cash flows remain
uncertain.

The COVID-19 pandemic and related public health measures have materially affected how we and our

customers are operating our businesses, and have materially affected our operating results and cash flows; the
duration and extent to which this will impact our future results remain uncertain. In response to the COVID-19
pandemic, we have cancelled or delayed some customer events, and shifted many of them, including Dreamforce,
World Tours, Connections, Tableau Conference, Basecamps and Salesforce.org’s Higher Ed Summit, to virtual-
only experiences. We may deem it advisable to similarly alter, postpone or cancel entirely additional customer,
employee and industry events in the future. Our shift to creating virtual customer, employee and industry events
may not be successful, and we may not be able to showcase our products as well as, or generate the same
customer interest, opportunities and leads through virtual events as we have historically done through in-person
events. If we attempt to reintroduce large in-person events, we may not be able to do so successfully and our
customers may not be able or willing to attend them.

We also temporarily closed all Salesforce offices globally. This global work-from-home operating
environment has caused strain for, and has adversely impacted productivity of, certain employees, and these
conditions may persist and harm our business, including our future sales and operating results. As long as the
pandemic continues, our employees may be exposed to health risks. Our efforts to reopen our offices safely may
not be successful; could expose our employees, customers and partners to health risks and us to associated
liability; and will involve additional financial burdens. The COVID-19 pandemic may have long-term effects on
the nature of the office environment and remote working. This may present risks for our real estate portfolio and
strategy and may present operational and workplace culture challenges that may adversely affect our business.

Moreover, the conditions caused by COVID-19 initially affected customer IT spending and may in the
future adversely affect our customers’ ability or willingness to purchase our enterprise cloud computing services.
These conditions delayed and may in the future delay prospective customers’ purchasing decisions, and reduced
and may in the future reduce the value or duration of our customers’ subscription contracts, and affect attrition
rates, all of which could adversely affect our future sales and operating results.

Our operations have been negatively affected by a range of external factors related to the COVID-19

pandemic that are not within our control. Authorities throughout the world have implemented numerous
preventative measures to contain or mitigate further spread of the virus, such as travel bans and restrictions,
limitations on business activity, quarantines, work-from-home directives and shelter-in-place orders. These
public health measures have caused, and are continuing to cause, business slowdowns or shutdowns in affected
areas, both regionally and worldwide, which have impacted our business and results of operations and cash
flows. For example, these measures and related economic effects contributed to certain customers’ reluctance or
inability to submit payments to us (as well as changes in billing frequency), and adversely impacted the
effectiveness of outsourced service providers we use to collect payments, and these conditions may persist or
worsen. The extent and duration of these measures could also impact our ability to address cybersecurity
incidents, have resulted in increased internet demand which could cause access issues, could affect our ability to
develop and support products and services, and could cause issues with access to data centers. As we continue to
monitor the situation and public health guidance, we may adjust our current policies and practices, and existing
and new precautionary measures could negatively affect our operations.

The extent of the impact of COVID-19 on our operational and financial performance will depend on certain

developments, including the duration and spread of the pandemic, future spikes of COVID-19 infections
resulting in additional preventative measures to contain or mitigate the spread of the virus, severity of the
economic decline attributable to the pandemic and timing and nature of a potential economic recovery, impact on
our customers and our sales cycles, our ability to generate new business leads, impact on our customer, employee
and industry events, and effects on our vendors, all of which are uncertain and cannot be predicted. The long-
term impact of the COVID-19 pandemic on our financial condition or results of operations remains uncertain.
Due to our subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected
in our results of operations until future periods. In addition, uncertainty regarding the impact of COVID-19 on
our future operating results and financial condition may result in our taking cost-cutting measures, reducing the
level of our capital investments and delaying or canceling the implementation of strategic initiatives, any of
which may negatively impact our business and reputation. If the COVID-19 pandemic has a substantial impact
on our employees’, partners’ or customers’ business and productivity, our results of operations and overall
financial performance may be harmed. The global macroeconomic effects of the COVID-19 pandemic and
related impacts on our customers’ business operations and their demand for our products and services may persist
for an indefinite period, even after the COVID-19 pandemic has subsided. In addition, the effects of the
COVID-19 pandemic may heighten many of the other risks described in this “Risk Factors” section.

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, health and other personal 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 our employees, partners or customers to disclose sensitive
information such as user names, passwords or other information to gain access to our customers’ data
or IT systems, or our data or our IT systems;

•

efforts by individuals or groups of hackers and sophisticated organizations, such as state-sponsored
organizations or nation-states, to launch coordinated attacks, including distributed denial-of-service
attacks;

third-party attempts to abuse our marketing, advertising or social platforms to impersonate persons or
organizations and disseminate information that is false or misleading;

cyberattacks on our internally built infrastructure on which many of our service offerings operate, or on
third-party cloud-computing platform providers;

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 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.

In addition, the changes in our work environment as a result of the COVID-19 pandemic could adversely
affect our security measures, as well as our ability to address and respond to incidents quickly. 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 respond to known and
potential risks. Our Board of Directors, Audit Committee and executive management are regularly briefed on our
cybersecurity policies and practices and ongoing efforts to improve security, as well as periodic updates on
cybersecurity 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 or that a material breach will not occur. 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, and could result 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;

the acquisition of new companies, requiring us to incorporate and secure different or more complex IT
environments;

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 cyberattack 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. Additionally, as our market
presence grows, we may face increased risks of cyberattack attempts or security threats.

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, regulatory 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 be the result of employee, contractor or other third-party acts or inaction, and could
negatively affect our brand and reputation. Additionally, such defects could 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. We determined this disruption did not materially affect our business, reputation or
financial results, but there is no assurance such circumstances could not recur with a material adverse effect on
our business.

In addition, our customers may use our services in unanticipated ways that may cause a disruption in
services for other customers attempting to access their data. As we acquire companies, we may encounter
difficulty in integrating 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 COVID-19 pandemic has
disrupted and may continue to 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, particularly with respect to third-

party cloud computing platforms, 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 and reputation 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 (including shelter-in-place or
similar orders), 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 pandemic (including the COVID-19 pandemic), 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 reputation and 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.

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. We continue to evaluate
such opportunities and expect to continue to make such investments and acquisitions in the future such as the
pending acquisition of Slack Technologies, Inc. (“Slack”), which was signed in December 2020 and is expected
to close in the second quarter of fiscal 2022.

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;

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 integrating acquired operations, technologies, services, platforms and personnel;

the inability to obtain (or a material delay in obtaining) the regulatory approvals, including from
antitrust or other similar regulatory authorities, 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 global hold separate order, issued in connection with our
acquisition of Tableau by the United Kingdom Competition & Markets Authority in fiscal 2020, which
order was lifted in fiscal 2020), which may include divestitures, ownership or operational restrictions
or other structural or behavioral remedies;

failure to fully assimilate, integrate or retrain 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;

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;

known and potential unknown liabilities associated with the acquired businesses, including due to
litigation;

difficulties in managing, or 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 operating lease right-of-use assets;

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;

•

additional stock-based compensation issued or assumed in connection with the acquisition, 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 (including a
potential one-time income tax payment in connection with the integration of ClickSoftware and other
acquired Israeli entities).

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.

Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired
businesses effectively may be impaired by the effects of the COVID-19 pandemic, government actions in light of
the pandemic, trade tensions and increased global scrutiny of foreign investments and acquisitions and
investments in the technology sector. For example, a number of countries, including the U.S. and countries in
Europe and the Asia-Pacific region, are considering or have adopted restrictions of varying kinds on transactions
involving foreign investments, whether in response to the COVID-19 pandemic or otherwise. Antitrust
authorities in a number of countries have also reviewed acquisitions and investments in the technology industry
with increased scrutiny. Governments may continue to adopt or tighten restrictions of this nature, some of which
may apply to acquisitions, investments or integrations of businesses by us, and such restrictions or government
actions could negatively impact our business and financial results.

We may not complete the acquisition of Slack within the time frame we anticipate or at all.

The completion of the acquisition of Slack is subject to a number of conditions, including receipt of Slack

stockholder approval, expiration or termination of the waiting period pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) and receipt of other approvals, consents or clearances
under specified antitrust and foreign investment laws. Pursuant to the HSR Act, on February 16, 2021, we and
Slack each received a request for additional information and documentary material, often referred to as a
“Second Request,” from the Antitrust Division of the Department of Justice (the “DOJ”). Issuance of the Second
Request extends the waiting period under the HSR Act until 30 days after we and Slack have each substantially
complied with the Second Request, unless the period for review is extended voluntarily by the parties and the
DOJ or is terminated earlier by the DOJ. We and Slack have and will continue to cooperate fully with the DOJ in
its review. We continue to anticipate completing the transaction during its fiscal quarter ending July 31, 2021,
subject to the satisfaction or waiver of the closing conditions specified in the merger agreement.

The failure to satisfy all of the required conditions could delay the completion of the acquisition for a
significant period of time or prevent it from occurring at all. For example, under certain limited conditions, we
and Slack may elect to terminate the merger agreement, which could materially and adversely affect our business
and reputation. A delay in completing the acquisition could cause us to realize some or all of the benefits later
than we otherwise expect to realize them if the acquisition is successfully completed within the anticipated time
frame, which could result in additional transaction costs or in other negative effects associated with uncertainty
about the completion of the acquisition.

We may fail to realize all of the anticipated benefits of the Slack acquisition, and the merger or those

benefits may take longer to realize than expected.

We believe that there are significant benefits and synergies that may be realized through combining the
products, scale and combined enterprise customer bases of Salesforce and Slack. However, the efforts to realize
these benefits and synergies will be a complex process and may disrupt both companies’ existing operations if
not implemented in a timely and efficient manner. The full benefits of the acquisition, including the anticipated
sales or growth opportunities, may not be realized as expected or may not be achieved within the anticipated time
frame, or at all. Failure to achieve the anticipated benefits of the acquisition could adversely affect our results of
operations or cash flows, cause dilution to our earnings per share, decrease or delay any accretive effect of the
acquisition and negatively impact the price of our common stock.

In addition, we will be required post-closing to devote significant attention and resources to successfully
align our business practices and operations. This process may disrupt the businesses and, if ineffective, would
limit the anticipated benefits of the acquisition.

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 and in the future may stress the capabilities of 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. Whether due to the effects of and
financial burdens associated with the COVID-19 pandemic or otherwise, we may not be able to make these
investments as quickly or effectively as necessary to successfully scale our operations.

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. Additionally, changes in our work environment and workforce as a result
of the COVID-19 pandemic could adversely affect our operations. The COVID-19 pandemic may have long-term
effects on the nature of the office environment and remote working. Any adjustments made to our current and
future office environments or work-from-home policies may not meet the needs and expectations of our
workforce, which could negatively impact our ability to attract and retain our employees. 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.

If our customers do not renew their subscriptions for our services or if they reduce the number of paying
subscriptions at the time of renewal, our revenue and current remaining performance obligation 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, including as a result of the COVID-19
pandemic.

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

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

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

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. Such sales
organization changes have in some periods resulted in, and may in the future result in, a 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.

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 comprises 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 governance of the Internet
Corporation for Assigned Numbers and Names (“ICANN”) and the Internet Assigned Numbers Authority, 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, potentially reducing 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. Other countries have attempted or are attempting to change or
limit the legal protections available to businesses that depend on the Internet for the delivery of their services.
Additionally, the COVID-19 pandemic has also led to quarantines, shelter-in-place orders, and work-from-home
directives, all of which have increased demands for internet access and may create access challenges. These

actions could potentially limit or interrupt access to our services from certain countries or Internet service
providers, increase our risk or add liabilities, impede our growth, productivity and operational effectiveness,
result in the loss of potential or existing customers and harm our business.

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:

•

natural disasters, acts of war, terrorism, and actual or threatened public health emergencies, including
the ongoing COVID-19 pandemic and related public health measures and resulting changes to laws and
regulations, including changes oriented toward protecting local businesses or restricting the movement
of our or our customers’ employees;

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, customs, anti-boycott, sanctions
and embargoes, 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 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, including the evolving
relations between the United States and China;

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, expand into new markets and enhance the breadth of our service offerings;

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; 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.

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 addressing concerns regarding privacy and data protection laws and
regulations of prospective customers with international operations or whose own customers operate
internationally. Moreover, restrictions in place in response to the COVID-19 pandemic have disrupted our
operations, and our customers’ operations and businesses, and this has adversely affected, and may continue to
adversely affect, our sales efforts.

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 us, 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, 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 or prospective
customers.

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 and, in February 2021, Mark Hawkins
resigned as President and Chief Financial Officer 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. Our
executive officers, key management, development or operations personnel could terminate their employment
with us at any time. The loss of one or more of our key employees or groups of employees 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 are also committed to building a
diverse workforce. We have experienced significant competition in talent recruitment and retention, and may not
in the future be successful in our talent recruitment and retention or achieving the diversity goals we have set
publicly. 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, including restrictions imposed in response to the COVID-19 pandemic. 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, equality 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. These difficulties may be further amplified by work-from-home requirements imposed and
other workforce actions taken in response to the COVID-19 pandemic. Our inability to maintain our corporate
culture 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. Outsourced provision of technical support may be
suddenly and adversely impacted by unforeseen events, for example, as occurred when certain business process
outsourced service providers were delayed in effectively servicing our customers due to conditions related to the
COVID-19 pandemic. Increased customer demand for these services, without corresponding revenues, could
increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our
applications and business reputation and on positive recommendations from our existing customers. Any failure
to maintain high-quality technical support, or a market perception that we do not maintain high-quality support,
could adversely affect our reputation, our ability to sell our service offerings to existing and prospective
customers, and our business, operating results and financial position.

Strategic and Industry Risks

Our efforts to expand our service offerings 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 current
service offerings may not succeed and may reduce our revenue growth rate. In addition, the markets for certain of
our offerings, including Work.com, Customer 360 Truth, 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, such as
our introduction of Hyperforce in fiscal 2021, 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 product and 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. Additionally, changes to our work environment and workforce as a result of the
COVID-19 pandemic could adversely affect our ability to timely develop enhancements to and new features for
existing or new services. Our efforts to quickly introduce new offerings designed to help our customers respond
to the COVID-19 pandemic, including our Work.com offering, may not be successful.

Furthermore, uncertainties about the timing and nature of new network platforms or technologies, including

Hyperforce, or modifications to existing platforms or technologies, including text messaging capabilities, or
changes in customer usage patterns thereof, could increase our research and development or service delivery
expenses or lead to our increased reliance on certain vendors. 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.

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

We believe that the brand identities we have developed including associations with 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, particularly for our core services, 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 even as we scale and expand our services. 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 or enter new markets 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.

Further, entry into markets with weaker protection of brands or changes in the legal systems in countries we

operate may impact our ability to protect our brands. If we fail to maintain, enhance or protect our brands, or if
we incur excessive expenses in our efforts to do so, our business, operating results and financial condition may
be materially and adversely affected.

We 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 in both domestic and
international markets, including in emerging markets. These companies 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, they
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.

The rapid spread of COVID-19 and its reverberating effects on the global economy have caused disruptions

to our industry, to the industries in which our portfolio companies operate and to financial markets. These
disruptions are inhibiting and may continue to inhibit the ability of our portfolio companies to meet their
performance targets, raise fundraising rounds, or complete a liquidity event. In some cases, our portfolio
companies may no longer be able to operate or could experience reduced revenues or profitability, increased
customer attrition, delayed, cancelled or unsuccessful public offerings, reduced ability to raise additional rounds
of financing, reduced acquisition offers or acquisition offers on unfavorable terms, reduced valuations in both
private and public markets, or insolvency and bankruptcy. These outcomes could materially adversely affect our
financial position, results of operations and cash flows.

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 have 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. For example, some of our investments in publicly traded securities may be

subject to lock-up agreements, which would prevent our ability to sell these investments after a public offering or
otherwise impede our ability to mitigate market volatility in such securities. Volatility in the financial markets,
including the impact of the COVID-19 pandemic, 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
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.

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 or integrity of the data access, 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 reputation and our
business.

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:

•

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

software companies that provide their product or service free of charge as a single product or when
bundled with other offerings, or only charge a premium for advanced features and functionality;

vendors who offer software tailored to specific services that are more directed toward those specific
services than our full suite of service offerings;

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 specialize in advertising, targeting, messaging, or campaign

automation;

•

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

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, more significant installed bases, broader geographic scope, broader suites of service offerings 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.

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

liability.

Positions we take on social and ethical issues may be unpopular with some of our employees or with our

customers or potential customers, which has in the past impacted and may in the future impact our ability to
attract or retain customers. We also may choose not to conduct business with potential customers or discontinue
or not expand business with existing customers due to these positions. Further, actions taken by our customers,
including through the use or misuse of our products, may result in reputational harm or possible liability. For
example, we have been subject to allegations in legal proceedings that we should be liable for the use of certain
of our products by third parties. Although we believe that such claims lack merit, such claims could cause
reputational harm to our brand or result in 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.

Our brand is also associated with our public commitments to sustainability, equality and ethical use, and any

perceived changes in our dedication to these commitments could harm our reputation or brand and could
adversely impact our relationships with our customers. Our disclosures on these matters, and standards we set for
ourselves or a failure to meet these standards, may influence our reputation and the value of our brand. For
example, we have elected to share publicly certain information about our corporate environmental, social, and
governance (“ESG”) initiatives and our commitment to the recruitment of a diverse workforce. Our business may
face increased scrutiny related to these activities, including from the investment community, and our failure to

achieve progress in these areas on a timely basis, or at all, could adversely affect our reputation, business,
financial performance, and growth.

Legal and Regulatory Risks

Privacy concerns and laws, such as the forthcoming California Privacy Rights Act, 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, and
the California Privacy Rights Act, which will amend the CCPA in January 2023, similarly impose new
obligations on us and many of our customers, potentially as both businesses and service providers. These laws
continue to evolve and as 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, 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 noncompliance, including as a result of penalties, fines and lawsuits related to 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, on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy
Shield Framework, one of the mechanisms that allowed companies, including Salesforce, to transfer personal
data from the European Economic Area (“EEA”) to the United States. In addition, the CJEU commented that
companies relying on another such mechanism, the European Commission’s Standard Contractual Clauses,
should assess on a case-by-case basis whether the law of the country of destination ensures adequate protection
of personal data transferred under EU law, by providing, where necessary, additional safeguards to those offered
by those clauses. Salesforce relies upon Binding Corporate Rules, a third mechanism, which provides additional
safeguards with respect to government requests for EU personal data, as well as the European Commission’s
Standard Contractual Clauses to transfer EU personal data internationally. Depending on how the CJEU’s
decision is enforced, the cost and complexity of providing our services in certain markets may increase. Based on
draft recommendations issued by the European Data Protection Board (“EDPB”), a body of privacy regulators
from across the EU charged with ensuring consistent application of GDPR, current indications are that, absent
agreement on a new bilateral cross-border transfer mechanism to replace the EU-US Privacy Shield Framework,
regulators may be inclined to interpret the decision as significantly restricting certain cross-border transfers.
Certain countries outside of the EEA (e.g., Russia, China and India) have also passed or are considering passing
laws requiring varying degrees of 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, in particular
where customers request specific warranties and unlimited indemnity for noncompliance with privacy laws, any
of which could harm our business.

In addition to government activity, privacy advocates 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. In addition, we have
seen a trend toward the private enforcement of data protection obligations, including through private actions for
alleged noncompliance, which could harm our business and negatively impact our reputation. For example, in
2020 we were made a party to a legal proceeding brought by a Dutch privacy advocacy group on behalf of
certain Dutch citizens that claims we violated the GDPR and Dutch Telecommunications Act through the
processing and sharing of data in connection with our Audience Studio and Data Studio products. We were also
named as a defendant in a similar lawsuit brought in the UK. Although we believe that these claims lack merit,
these or similar future claims could cause reputational harm to our brand or result in liability.

Furthermore, the uncertain and shifting regulatory environment and trust climate, particularly in regard to

COVID-19-related data processing, may raise concerns regarding data privacy and cybersecurity, which may
cause our customers or our customers’ customers to resist providing the data necessary to allow our customers to
use our services effectively. In addition, new products we develop in connection with changing events, such as in
response to the COVID-19 pandemic, may expose us to liability or regulatory risk. 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.

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, 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 to use 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 orders, which
impose significant restrictions on the ability to utilize telephone calls and text messages to mobile 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.

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 include

claims, suits, government investigations and other proceedings involving alleged infringement of third-party
patents and other intellectual property rights, as well as commercial, corporate and securities, labor and
employment, class actions, wage and hour, antitrust, data privacy and other matters.

The software and Internet industries are characterized by the existence of a large number of patents,
trademarks, trade secrets 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. We have also 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.

In addition, we have in the past been, and may in the future be, sued by third parties who seek to target us
for actions taken by our customers, including through the use or misuse of our products. For example, we have
been subject to allegations in legal proceedings that we should be liable for the use of certain of our products by
third parties. Although we believe that such claims lack merit, such claims could cause reputational harm to our
brand or result in liability.

Our exposure to risks associated with various claims, including claims related to the use of intellectual

property as well as securities and related stockholder derivative claims, may be increased as a result of
acquisitions of other companies. For example, we are subject to ongoing securities class action litigation and
related stockholder derivative claims brought against Tableau that remain outstanding, and as to which we may
ultimately be subject to liability or settlement costs. Additionally, 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 acquired companies or technologies. In addition, third parties have made claims in
connection with our acquisitions and may do so in the future, and they may also 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 or
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 or settlement 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, including our operating cash flow in a particular
period. 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 period.

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. Similar uncertainty applies to our U.S. and international trademark
registrations and applications. Furthermore, legal standards relating to the validity, enforceability and scope of
protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of
protection for some intellectual property rights in the U.S. and elsewhere. Effective patent, trademark, copyright
and trade secret protection may not be available to us in every country in which our services are available and
legal changes and uncertainty in various countries’ intellectual property regimes may result in making conduct
that we believe is lawful to be deemed violative of others’ rights. 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, our contribution to open
source projects, various competition law regimes or the need to obtain licenses from others may require us to
license our intellectual property in certain circumstances. 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 from our core
business, and harm our business.

Lawsuits were filed against Slack, Salesforce and the members of the Slack board in connection with the
mergers and additional lawsuits may be filed in the future. An adverse ruling in any such lawsuit could result
in an injunction preventing the completion of the mergers and/or substantial costs to Salesforce.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have

entered into acquisition, merger or other business combination agreements like the merger agreement. Even if
such a lawsuit is without merit, defending against these claims can result in substantial costs and divert
management time and resources. An adverse judgment could result in monetary damages, which could have a
negative impact on our liquidity and financial condition.

After the mergers were announced, seven lawsuits were filed by purported Slack stockholders in the United

States District Court for the Northern District of California and six lawsuits were filed by purported Slack
stockholders in the United States District Court for the Southern District of New York, each in connection with

the mergers. The complaints named as defendants Slack, the members of the Slack board, and, with respect to
three of the actions, Salesforce, and alleged, among other things, that the defendants caused a materially
incomplete and misleading proxy statement relating to the proposed mergers to be filed with the SEC in violation
of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and that Slack’s board
of directors breached their fiduciary duties in connection with the mergers. On February 22, 2021, Slack filed a
Current Report on Form 8-K in which it voluntarily made supplemental disclosures relating to the proposed
mergers. By March 3, 2021, all thirteen of the pending cases had been voluntarily dismissed without prejudice.

One of the conditions to the closing of the mergers is that no injunction by any governmental entity having
jurisdiction over Salesforce or Slack has been entered and continues to be in effect and no law has been adopted,
in either case, that prohibits the closing of the mergers. Consequently, if a plaintiff is successful in obtaining an
injunction prohibiting completion of the mergers, that injunction may delay or prevent the mergers from being
completed within the expected time frame or at all, which may adversely affect our business, financial position
and results of operations.

There can be no assurance that any of the defendants will be successful in the outcome of any lawsuits filed
in connection with the mergers. The defense or settlement of any lawsuit or claim that remains unresolved at the
time the mergers are completed may adversely affect our business, financial condition, results of operations and
cash flows.

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
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, and termination of any such contract may adversely impact our other existing or prospective
government contracts. 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 may subject us to liability if we are not in full compliance with applicable laws.

Our solutions are subject to export and import controls where we conduct our business activities, including

the U.S. Commerce Department’s Export Administration Regulations, U.S. Customs regulations and various
economic and trade sanctions regulations established by the U.S. Treasury Department’s Office of Foreign
Assets Control. If we fail to comply with applicable trade laws, we and certain of our employees could be subject
to substantial civil or criminal penalties, including the possible loss of trade 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 necessary authorizations, including any required licenses, may be time-
consuming, require expenditure of corporate resources, is not guaranteed, and may result in the delay or loss of
sales opportunities or the ability to realize value from certain acquisitions or engagements. Furthermore, U.S.
export control laws and economic sanctions may prohibit or limit the transfer of certain products and services to
U.S. embargoed or sanctioned countries, governments and parties. 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 trade 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 may adversely affect our business, financial condition and results of operations.

Import and export control regulations in the U.S. and other countries are subject to change and uncertainty,
including as a result of geopolitical developments, relations between the United States and China and the effects
of the COVID-19 pandemic.

Financial Risks

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 changes in our attrition rate, may not
be fully reflected in our results of operations until future periods, including changes resulting from the effects of
the COVID-19 pandemic. 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 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 unpredictability of future general economic and financial market conditions (including due to the

impact of the COVID-19 pandemic), the pace of change and innovation in enterprise cloud computing services,
the impact of foreign currency exchange rate 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, and unanticipated events,
such as the COVID-19 pandemic, may cause us to incur expenses beyond what we anticipated. 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 in some periods, we
have not been able to, and may not be able in the future to provide continued operating margin expansion, which
could harm our business and cause the market price of our common stock to decline.

Unanticipated changes in our effective tax rate and additional tax liabilities and 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 our 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, local 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 our business operations including as a result of
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 or financial position.

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

increased scrutiny and corresponding tax disputes, which may impact our cash flows and financial results.
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 carryforwards, 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 changes related to acquisitions may result in cash tax
obligations.

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’s, the European Commission’s, and certain major
jurisdictions’ heightened interest in and taxation of companies participating in the digital economy.
Governments’ responses to the economic impact of COVID-19 may lead to tax rule changes that could materially
and adversely affect our cash flows and financial results.

We are exposed to fluctuations in currency exchange rates that have in the past and could in the future

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, including
in emerging 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 currency fluctuations primarily in Euro, British Pound Sterling, 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 affect our ability to accurately predict our future results and earnings.
Additionally, global events, including the sudden and unexpected effects of the COVID-19 pandemic, as well as
geopolitical developments, fluctuating commodity prices and trade tariff developments, have caused and may in
the future cause 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 impact our financial condition or results of operations.

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, 2021, we had a substantial level of debt, including our 2023 and 2028 Senior Notes
(“Senior Notes”) and the loan we assumed when we purchased 50 Fremont due June 2023. In December 2020,
we entered into a credit agreement (the “Revolving Loan Credit Agreement”), which provides for a $3.0 billion
unsecured revolving credit facility (the “Credit Facility”) that matures in December 2025, replacing our previous
revolving credit facility of $1.0 billion. There were no outstanding borrowings under the Credit Facility as of
January 31, 2021. We may use the proceeds of future borrowings under the Credit Facility for general corporate
purposes, which may include, without limitation, financing the consideration for and fees, costs and expenses
related to any acquisition. In addition, in connection with our pending acquisition of Slack, in December 2020,
we obtained a 364-day senior unsecured bridge loan facility (“Bridge Facility”). The original commitments in
respect of the Bridge Facility were $10.0 billion, but were reduced to $7.0 billion in December 2020 following
our entry into a $3.0 billion three-year senior unsecured loan agreement (“Acquisition Term Loan”). In February
2021, we elected to further reduce our Bridge Facility commitments to $4.0 billion. The availability and funding
of the Bridge Facility and the Acquisition Term Loan are conditioned on the consummation of the acquisition of
Slack in accordance with the terms of the merger agreement and are subject to certain exceptions, qualifications
and other conditions. We expect to replace the commitments in respect of the Bridge Facility prior to the
consummation of the acquisition with the incurrence of new indebtedness or commitments in respect thereof.

In addition to the outstanding and contemplated debt obligations above, we have also recorded substantial

liabilities associated with noncancellable future payments on our long-term lease agreements. We also have
significant other contractual commitments, such as commitments with infrastructure service providers, which are
not reflected on our consolidated balance sheets.

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 toward debt service
obligations and principal repayments; and

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

recent downturns in connection with the effects of the COVID-19 pandemic.

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, we may seek debt financing to fund future acquisitions following the Slack acquisition. We can offer
no assurance that we can obtain debt financing on terms acceptable to us, if at all.

In addition, adverse changes by any rating agency to our credit facilities 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 agreement 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 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.

Lease accounting guidance requires that we record a liability for operating lease activity on our consolidated

balance sheet, which increases both our assets and liabilities and therefore 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.

Current and future accounting pronouncements and other financial and nonfinancial 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 ESG materiality assessment, we have expanded and, in the future, may continue to expand our
disclosures in these areas. Our failure to report accurately or achieve progress on our metrics on a timely basis, or
at all, could adversely affect our reputation, business, financial performance and growth.

Risks Related to Owning Our Common Stock

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. Fluctuations have occurred due to known and unknown risks,

including the sudden and unanticipated effects of the COVID-19 pandemic. In addition, our fiscal fourth quarter
has historically been our strongest quarter for new business and renewals, and the year-over-year compounding
effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of
invoices that we generate in the fourth quarter to continually increase in proportion to our billings in the other
three quarters of our fiscal year. As a result, our fiscal first quarter has typically in the past been our largest
collections and operating cash flow quarter; this trend has been adversely impacted by the effects of the
COVID-19 pandemic and related economic downturn and uncertainties.

Additionally, some of the important factors that may cause our revenues, operating results and cash flows to

fluctuate from quarter to quarter include:

•

general economic or geopolitical conditions, including the impacts of the COVID-19 pandemic, which
can adversely affect either our customers’ ability or willingness to purchase additional subscriptions or
upgrade their services, or delay prospective customers’ purchasing decisions, reduce the value of new
subscription contracts, or affect attrition rates;

•

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 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 collectability of invoices related to
multi-year 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;

variations in the revenue mix of our services and growth rates of our 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, customer preference or other factors;

changes in payment terms and the timing of customer payments and payment defaults by customers as
have been and may continue to be impacted by the effects of the COVID-19 pandemic;

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

fluctuations in foreign currency exchange rates such as with respect to the U.S. Dollar against the Euro
and 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;

the timing of commission, bonus, and other compensation payments to employees, including decisions
to guarantee some portion of commissions payments in connection with extraordinary events such as
the partial commission guarantee in the fiscal quarter ended April 30, 2020;

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 or changes in the nature or extent of our use of existing real estate,
including 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, including for example expenses related to the COVID-19 pandemic;

•

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 multinational corporations, 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 options;

technical difficulties or interruptions in our services;

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

conditions, and particularly sudden changes, in the financial markets, such as the recent volatility
caused by the COVID-19 pandemic, 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 or debt issuances, including as consideration in or in conjunction with 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 and acquisition 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 recommendations regarding our stock, the market price of our
common stock could decline.

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,
current 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;

•

our ability to meet or exceed forward-looking guidance we have given or to meet or exceed the
expectations of investors, analysts or others; our ability to give forward-looking guidance consistent
with past practices; and changes to or withdrawal of previous guidance or long-range targets, including
due to uncertainty in connection with effects of the COVID-19 pandemic;

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

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

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

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

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 and health 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;

changes to our credit ratings; and

environmental, social, governance and other issues impacting our reputation.

In addition, if the market for technology stocks or the greater securities market, including debt offerings, 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 such as securities litigation against Tableau that was brought
before we acquired that company. Such litigation, whether against Salesforce or an acquired subsidiary, could
result in substantial costs and a diversion of management’s attention and resources and liability resulting from or
the settlement of such litigation could result in material adverse impacts to our operating cash flows or results of
operations for a given period.

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.

General Risks

Volatile and significantly weakened global economic conditions have in the past and may in the future

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 significant economic and market downturns in
connection with the COVID-19 pandemic, and are likely to experience additional cyclical downturns from time
to time in which economic activity is 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,
as did the conditions associated with the COVID-19 pandemic, and the full impact of such conditions can be
difficult to predict. In addition, geopolitical and domestic political developments, such as existing and potential
trade wars and other events beyond our control, can increase levels of political and economic unpredictability
globally and increase the volatility of global financial markets, as has been the case with the COVID-19
pandemic and relations between the United States and China. Moreover, these conditions have affected and may
continue to affect the rate of IT spending; could adversely affect our customers’ ability or willingness to attend
our events or to purchase our enterprise cloud computing services; have delayed and may delay customer
purchasing decisions; have reduced and may in the future reduce the value and duration of customer subscription
contracts; and we expect these conditions will adversely affect our customer attrition rates. All of these risks and
conditions could materially adversely affect our future sales and operating results.

Natural disasters and other events beyond our control have in the past and may in the future materially

adversely affect us.

Natural disasters or other catastrophic events have in the past and may in the future 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 shutoffs
or shortages, actual or threatened public health emergencies (including the ongoing COVID-19 pandemic) and
other events beyond our control. For example, in response to the COVID-19 pandemic we temporarily closed our
offices globally, including our corporate headquarters, and are experiencing and expect to continue to experience
ongoing effects related to the local and global economic and other effects of this pandemic. 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 personnel, 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 earthquake-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,

and the adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as
another unexpected and adverse event, such as the COVID-19 pandemic. For example, wildfires have resulted in
power shut-offs in the San Francisco Bay Area and are likely to occur in the future, and this could adversely
affect the work-from-home operations of our employees in the San Francisco Bay Area.

Climate change may have an 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. Any of
our primary locations may be vulnerable to the adverse effects of climate change. For example, our California
headquarters have historically experienced, and are projected to continue to experience, climate-related events at
an increasing frequency including drought, water scarcity, heat waves, wildfires and resultant air quality impacts
and power shutoffs associated with wildfire prevention. Furthermore, it is more difficult to mitigate the impact of
these events on our employees while they work from home as a result of the COVID-19 pandemic. Changing
market dynamics, global policy developments, and the increasing frequency and impact of extreme weather
events on critical infrastructure in the U.S. and elsewhere have the potential to disrupt our business, the business
of our third-party suppliers, and the business of our customers, and may cause us to experience higher attrition,
losses and additional costs to maintain or resume operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

As of January 31, 2021, our executive and principal offices for sales, marketing, professional services,
development and administration consisted of approximately 1.8 million square feet of leased and owned property
in San Francisco. Excluded from this amount is approximately 362,000 square feet in San Francisco that is
currently sublet, as well as approximately 297,000 square feet in San Francisco currently available for sublease
as we began consolidating and subleasing additional real estate leases in fiscal 2021.

We also lease office space for our operations in various locations throughout the United States as well as

office space in a number of countries in Europe, North America, Asia, South America, Africa and Australia.

We 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, such as the Tableau shareholder derivative action, see

Note 14 “Legal Proceedings and Claims” to the consolidated financial statements in Item 8 of Part II.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 4A.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following sets forth certain information regarding our current executive officers as of February 28, 2021

(in alphabetical order):

Name

Age

Position

Joe Allanson . . . . . . . . . . . . . . . . . . .
Marc Benioff . . . . . . . . . . . . . . . . . . .
Parker Harris . . . . . . . . . . . . . . . . . . .
Brent Hyder . . . . . . . . . . . . . . . . . . . .
Gavin Patterson . . . . . . . . . . . . . . . . .
Srinivas Tallapragada . . . . . . . . . . . .
Bret Taylor
. . . . . . . . . . . . . . . . . . . .
Amy Weaver . . . . . . . . . . . . . . . . . . .

57 Chief Accounting Officer and Corporate Controller
56 Chair of the Board, CEO and co-Founder
54 Director, co-Founder and Chief Technology Officer
56
53
51
40
53

President and Chief People Officer
President and Chief Revenue Officer
President and Chief Engineering Officer
President and Chief Operating Officer
President and Chief Financial Officer

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 (WEF) Board of Trustees, Mr. Benioff serves as the
inaugural chair of the 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.

Parker Harris has served as a Director since August 2018. 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.

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.

Gavin Patterson has served as our President and Chief Revenue Officer since August 1, 2020. Prior to that,

he served as our President and CEO International and Chairman of EMEA Advisory Board, President
International and Lead of the UK & EMEA Advisory Board, and Lead of the UK & EMEA Advisory Board from
April 2020 to July 2020. Previously, he served as Chief Executive of BT Group plc from September 2013 to
January 2019. He is Chair of Business in the Community, a non-profit in the United Kingdom, and sits on the
boards of Elixirr Consulting, Tappit and Fractal Analytics. He holds a MEng in Chemical Engineering from
Cambridge University.

Srinivas 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. Prior to that,
Mr. Tallapragada served as a Senior Vice President at Oracle, SAP and held various roles at Oracle, Infosys and
Asian Paints. Mr. Tallapragada holds a master’s 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. 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 Financial Officer since February 1, 2021. Prior to that,
she served as President and Chief Legal Officer from January 2020 to January 2021, 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.

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, 2021, there were 464 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”), the Nasdaq 100 Index and the Dow Jones Industrial Average, which we
have added this year in light of the Company’s addition to this index in April 2020, for each of the last five fiscal
years ended January 31, 2021, assuming an initial investment of $100. Data for the S&P 500 Index, Nasdaq
Computer, Nasdaq 100 Index and Dow Jones Industrial Average 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

400

350

300

250

200

150

100

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

salesforce.com
Nasdaq 100 Index

S&P 500 Index
Dow Jones Industrial Average

Nasdaq Computer

1/31/2016

1/31/2017

1/31/2018

1/31/2019

1/31/2020

1/31/2021

salesforce.com . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq Computer . . . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq 100 Index . . . . . . . . . . . . . . . . . . . . . . . . .
Dow Jones Industrial Average . . . . . . . . . . . . . . . .

$100
$100
$100
$100
$100

$116
$117
$124
$120
$124

$167
$146
$175
$162
$163

$223
$139
$171
$161
$156

$268
$166
$246
$210
$176

$331
$191
$360
$302
$195

Recent Sales of Unregistered Securities

Not applicable.

ITEM 6. SELECTED FINANCIAL DATA

Omitted at registrant’s option.

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 2021 and 2020 items and year-to-year comparisons between

fiscal 2021 and 2020, as well as certain fiscal 2019 items. Discussions of fiscal 2019 items and year-to-year
comparisons between fiscal 2020 and 2019 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, 2020.

Overview

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

and customers together. With our Customer 360 platform we deliver a single source of truth, connecting
customer data across systems, apps and devices to help companies sell, service, market and conduct commerce,
from anywhere. Since our founding in 1999, we have pioneered innovations in cloud, mobile, social, analytics
and artificial intelligence (“AI”), enabling companies of every size and industry to transform their businesses in
the all-digital, work-from-anywhere era.

COVID-19 Impact

In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was first reported. After
ongoing assessment of the rapid spread, number of cases and countries affected, on March 11, 2020, the World
Health Organization characterized COVID-19 as a pandemic. The COVID-19 pandemic has created significant
global economic uncertainty, adversely impacted the business of our customers and partners, impacted our
business and results of operations and could further impact our results of operations and our cash flows in the
future.

In response to the COVID-19 pandemic, we have been guided by our core values of trust, customer success,

innovation and equality. Beginning in the first fiscal quarter and through the remainder of fiscal 2021, we took

actions in response to the pandemic that focused on maintaining business continuity, supporting our employees,
helping our customers and communities and preparing for the future and the long-term success of our business.

As a result of the pandemic, we experienced a slight decline in new business in the first quarter of fiscal
2021 as compared to the same prior-year period; however, new business grew during the remainder of fiscal
2021 at rates consistent with historical trends prior to COVID-19. In addition, as a result of actions taken by us in
response to the pandemic, we experienced incremental operating expenses and lower than expected operating
cash flows for the full year of fiscal 2021, when compared to historical trends. For example, changes in billing
frequency for new business and investments in our go-to-market efforts resulted in a negative impact to our
operating cash flows during the year. In fiscal 2021, our income from operations benefited from our global work
from home policy and limited business travel by our employees. We continue to evaluate our office space needs,
and as a result we recorded approximately $216 million of impairments to assets associated with real estate
leases in select locations we have decided to exit, of which approximately $184 million was recorded in the
fourth quarter of fiscal 2021.

In addition, we have in the past implemented strategic realignments to position our company for future
growth and will continue to do so, particularly as we evaluate the impact of COVID-19 on our business. As part
of our current strategic realignment, we have redirected and may in the future redirect some resources from areas
that no longer align with our business priorities into key growth and strategic areas, as well as to increase
investments in our go-to-market and product efforts. As a result of these investments and redirection efforts,
which included some position eliminations, we saw an increase in expenses in fiscal 2021. In addition, as we
continue to evaluate our office space needs, we may record additional impairments to associated assets. As we
adjust and refine our strategy, there may be additional investments and redirection efforts in the future.

We do not yet know the impact the pandemic will have on our long-term revenue growth and profitability.

Authorities throughout the world have implemented numerous preventative measures to contain or mitigate
further spread of the virus, such as travel bans and restrictions, limitations on business activity, quarantines,
work-from-home directives and shelter-in-place orders. These measures have caused, and could continue to
cause, business slowdowns or shutdowns in affected areas, both regionally and worldwide. These business
slowdowns and shutdowns have impacted and may continue to impact our business and results of operations. For
example, the extent and duration of these measures could impact our ability to address cybersecurity incidents;
have resulted in increased internet demand, which could cause access issues; could affect our ability to develop
and support products and services; and could cause issues with access to data centers.

The ultimate extent of the impact of the COVID-19 pandemic on our operational and financial performance
depends on certain developments, including the duration of the pandemic and any resurgences, the severity of the
disease, responsive actions taken by public health officials, the development, distribution and public acceptance
of treatments and vaccines, the impacts on our customers and our sales cycles, our ability to generate new
business leads, the impacts on our customers, employee and industry events, and the effects on our vendors, all of
which are uncertain and currently cannot be predicted with any degree of certainty. As a result, the extent to
which the COVID-19 pandemic will continue to impact our financial condition or results of operations is
uncertain. Due to our primarily subscription-based business model, the effect of the COVID-19 pandemic may
not be fully reflected in our results of operations until future periods. If the COVID-19 pandemic has a
substantial impact on our employees’, partners’ or customers’ productivity, our results of operations and overall
financial performance may be harmed. In addition, the global macroeconomic effects of the COVID-19
pandemic and related impacts on our customers’ business operations and their demand for our products and
services may persist for an indefinite period, even after the COVID-19 pandemic has subsided.

See Part I, Item 1A. “Risk Factors” for further discussion of the impact and possible future impacts of the

COVID-19 pandemic on our business.

Highlights from the Fiscal Year 2021.

• Revenue: Total fiscal 2021 revenue was $21.3 billion, an increase of 24 percent year-over-year.

• Earnings per Share: Fiscal 2021 diluted earnings per share was $4.38 as compared to earnings per
share of $0.15 from a year ago, and was benefited by approximately $2.0 billion from the one-time
discrete tax benefit resulting from the recognition of deferred tax assets related to an intra-entity
transfer of intangible property and an unrealized gain of $1.7 billion associated with the initial public
offerings of two of our strategic investments.

• Cash: Cash provided by operations for fiscal 2021 was $4.8 billion, an increase of 11 percent year-
over-year. Total cash, cash equivalents and marketable securities ended fiscal 2021 at $12.0 billion.

• Remaining Performance Obligation: Remaining performance obligation ended fiscal 2021 at

approximately $36.1 billion, an increase of 17 percent year-over-year. Current remaining performance
obligation ended fiscal 2021 at approximately $18.0 billion, an increase of 20 percent year-over-year.

• Acquisition: During fiscal 2021, we completed the acquisition of Vlocity, Inc. (“Vlocity”) for
$1.4 billion, consisting primarily of $1.2 billion in cash. Additionally, during fiscal 2021, we
announced our pending acquisition of Slack Technologies, Inc. (“Slack”), a leading channel-based
messaging platform, which is expected to close in the second quarter of fiscal 2022, subject to
satisfaction of customary closing conditions, including regulatory approvals, for an estimated
$15.6 billion in cash and 45 million shares of Salesforce common stock, based on Slack Class A and
Class B shares outstanding as of January 31, 2021.

We continue to invest for future growth and are focused on several key growth levers, including driving
multi-cloud adoption, increasing our penetration with enterprise and international customers and our industry-
specific reach with more vertical software solutions. These growth drivers often require a more sophisticated
go-to-market approach and, as a result, we may incur additional costs upfront to obtain new customers and
expand our relationships with existing customers, including additional sales and marketing expenses specific to
subscription and support revenue. As a result, we have seen that customers with many of these characteristics
have lower attrition rates than our company average.

We plan to continue to reinvest a significant portion of our income from operations in future periods to grow

and innovate our business and service offerings and expand our leadership role in the cloud computing industry.
We drive innovation organically and, to a lesser extent, through acquisitions. We regularly evaluate acquisitions
and investment opportunities in complementary businesses, joint ventures, services, technologies and intellectual
property rights in an effort to expand our service offerings and to nurture the overall ecosystem for our offerings.
Past acquisitions have enabled us to deliver innovative solutions in new categories, including analytics and
integration. We continue to evaluate investment opportunities and expect to continue to make investments and
acquisitions in the future, such as our pending acquisition of Slack. Slack has an integrated value proposition
across all of our service offerings and, upon close of the transaction and successful product integration, we
believe it will further enable companies to grow and succeed in an all-digital, work-from-anywhere era.

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 and
increased enterprise solution selling activities. 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.

The expanding global scope of our business and the heightened volatility of global markets, including as a

result of COVID-19, expose us to the risk of fluctuations in foreign currency markets. Fluctuations in foreign
currency exchange rates had a modest favorable impact on our revenue results for fiscal 2021. In addition,
fluctuations in foreign currency exchange rates had a modest favorable impact on both our remaining
performance obligation and current remaining performance obligation as of January 31, 2021. We expect these
fluctuations to continue in the future.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2021, for example, refer to the fiscal year ending

January 31, 2021.

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.

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 2021.

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

our enterprise cloud computing services (collectively, “Cloud Services”). Cloud Services allow customers to use
our 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 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 are generally recognized ratably over the contract term. Changes in contract duration for multi-year
licenses can impact the amount of revenues recognized upfront. Revenues from software licenses represent less
than ten percent of total subscription and support revenue for fiscal 2021.

The revenue growth rates of each of our 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 our Sales, Service or Platform
service offering 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.

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, 2021, our attrition rate, excluding our
Integration service offering, Salesforce.org and Tableau, was between 9.0% and 9.5%. Prior to fiscal year 2021,
our attrition rate excluded our Commerce service offering. In general, we exclude service offerings from
acquisitions from our attrition calculation until they are fully integrated into our customer success organization.
While our attrition rate is difficult to predict, we expect it to remain consistent or slightly better in the near term
due to the diversity of size, industry and geography within the customer base. However, our attrition rate may
increase over time, including, for example, as a result of COVID-19.

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.

Attrition and Subscription and
Support Revenue

20%

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Subscription and Support Revenue

Attrition

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
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. In response to COVID-19, we offered temporary financial flexibility to some
customers in the first quarter of fiscal 2021 and changed billing frequencies for other customers throughout fiscal
2021, which has delayed payments to periods later than expected. We also have accelerated our investments in
our go-to-market and product efforts throughout fiscal 2021, which resulted in increased expenses and a negative
impact to operating cash flow. These efforts have affected and may continue to affect trends related to the
seasonal nature of unearned revenue, accounts receivable and operating cash flow. Unearned revenues, accounts
receivable and operating cash flow may also be impacted by acquisitions. For example, operating cash flows may
be adversely impacted by acquisitions due to transaction costs, financing costs such as interest expense and lower
operating cash flows from the acquired entity.

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)

$10,000

$5,000

$15,000

$10,000

$5,000

Fiscal 2021

Fiscal 2020

Fiscal 2019

Fiscal 2021

Fiscal 2020

Fiscal 2019

Net Cash Provided by Operating Activities
(three months ended)

$2,000

$1,000

Fiscal 2021

Fiscal 2020

Fiscal 2019

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. Remaining performance obligation is also impacted by
acquisitions. Unbilled portions of the remaining performance 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 are typically high
at the beginning of the contract period, zero just prior to renewal, and increase if the agreement is renewed. Low
remaining performance obligation attributable to a particular subscription agreement is often associated with an
impending renewal but may not be an indicator of the likelihood of renewal or future revenue from such
customer. Changes in contract duration can impact remaining performance obligation and current remaining
performance obligation.

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

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

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$40.0

$30.0

$20.0

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Q1
FY19

Q2
FY19

Q3
FY19

Q4
FY19

Q1
FY20

Q2
FY20

Q3
FY20

Q4
FY20

Q1
FY21

Q2
FY21

Q3
FY21

Q4
FY21

Current RPO

Noncurrent RPO

Cost of Revenues and Operating Expenses

Impact of Acquisitions

The comparability of our operating results is impacted by our recent acquisitions, including our acquisition
of Vlocity in June 2020 and our 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. We
expect the cost of professional services to be approximately in line with revenues from professional services in
future fiscal periods. We believe that this investment in professional services facilitates the adoption of our
service offerings.

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 make up the majority of our operating expenses 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. We capitalize
certain costs to obtain customer contracts, such as commissions, and amortize these costs on a straight-line basis.
Payments of these commissions are not consistent with the period in which the expense is recognized.

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.

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,
including 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.

Critical estimates in valuing certain of the intangible assets and goodwill we have acquired are:

•

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

historical and expected customer attrition rates and anticipated growth in revenue from acquired
customers;

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.

In fiscal 2021, we changed our international corporate structure, which included the transfer of certain
intangible property between foreign affiliates resulting in a net tax benefit of $2.0 billion related to foreign
deferred tax assets. The deferred tax assets were recognized as a result of the book and tax basis difference on the
intangible property and were based on the intangible property’s current fair value. In determining the estimated

fair value of the intangible property, we made significant estimates and assumptions including, but not limited to,
projected revenues, operating expenses and geographic earnings mix in the valuation models. We believe that it
is more likely than not that the deferred tax assets will be realized, and will regularly evaluate its realizability.

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 and require judgment due to the lack of
readily available market data. 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 values of our privately held equity securities are adjusted 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, as
adjusted to reflect the specific rights and preferences of those securities we hold.

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.

The particular privately held debt and equity 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 enterprise value of the company. As a result, our investment value in a
specific company may move by more or less than any change in the value of that overall company. An immediate
decrease of ten percent in enterprise value of our largest privately held equity securities held as of January 31,
2021 could result in a $66 million reduction in the value of our investment portfolio.

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

2020

% of
Total
Revenues

2019

% of
Total
Revenues

2021

Revenues:

Subscription and support . . . . . . . . . . . . . . $19,976
1,276
Professional services and other . . . . . . . . .

94% $16,043
1,055
6

94% $12,413
869
6

93%
7

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

21,252

100

17,098

100

13,282

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

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

4,154
1,284

5,438

15,814

3,598
9,674
2,087

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

15,359

Income from operations . . . . . . . . . . . . . . . . . . .
Gains on strategic investments, net (3) . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . .

455
2,170
(64)

Income before benefit from (provision for)

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

2,561

Benefit from (provision for) income

taxes (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,511

20
6

17
45
10

2
10
0

3,198
1,037

4,235

12,863

2,766
7,930
1,704

166

12,566

297
427
(18)

706

19
6

16
46
10

2
2
0

(580)

(3)

2,604
847

3,451

9,831

1,886
6,064
1,346

9,296

535
542
(94)

983

127

20
6

14
46
10

4
4
(1)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,072

19% $

126

1% $ 1,110

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

millions):

Fiscal Year Ended January 31,

% of
Total
Revenues

2020

2021

% of
Total
Revenues

2019

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $662
459
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3% $440
352
2%

3% $215
232
2

2%
2

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

Fiscal Year Ended January 31,

% of
Total
Revenues

2019

2020

2021

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $241
703
. . . . . . . . . . . . . . . . . . . . . . . .
Research and development
941
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
305
General and administrative . . . . . . . . . . . . . . . . . . . . . . . .

1% $204
510
4
852
4
219
1

1% $161
307
3
643
5
172
1

1%
2
5
1

(3) During fiscal 2021, two of our strategic investments completed their initial public offering, resulting in an

unrealized gain of $1.7 billion as of January 31, 2021.

(4) Amounts include approximately $2.0 billion of one-time benefit from a discrete tax item related to the

recognition of deferred tax assets resulting from an intra-entity transfer of intangible property in fiscal 2021,
and a benefit related to the partial release of the valuation allowance of $612 million for fiscal 2019.

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):

As of January 31,

2021

2020

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

$11,966
12,607
36.1
2,690

$ 7,947
10,662
30.8
2,694

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

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, 2021 compared to the same
period of fiscal 2020 was impacted by our acquisitions in the current and prior year, including the acquisition of
Tableau in the prior year, which was our largest acquisition to date. In our discussion of changes in our results of
operations for the fiscal year ended January 31, 2021 compared to the same periods of fiscal 2020, we may
quantitatively disclose the impact of our acquired products and services for the fiscal year 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, 2021 and 2020

Revenues

(in millions)

Fiscal Year Ended
January 31,

Variance

2021

2020

Dollars

Percent

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

$19,976
1,276

$16,043
1,055

$3,933
221

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

$21,252

$17,098

$4,154

25%
21

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 six percent
of total subscription and support revenues for fiscal 2021. Subscription and support revenues accounted for
approximately 94 percent of our total revenues for both fiscal 2021 and fiscal 2020.

The acquisition of Tableau in August 2019 contributed approximately $1.5 billion and $652 million to total

subscription and support revenues in fiscal 2021 and fiscal 2020, respectively, and is included in the above
amounts. As a result of our business combination activity, we recorded 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.

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Platform and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and Commerce . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended
January 31,

2021

2020

$ 5,191
5,377
6,275
3,133

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

Variance
Percent

13%
20%
40%
25%

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

$19,976

$16,043

Our Industry Offerings revenue is included in either Sales, Service or Platform and Other depending on the

primary service offering purchased. Subscription and support revenues from Platform and Other benefited from a
full twelve months of revenue from the acquisition of Tableau in fiscal 2021 as compared to six months in fiscal
2020. The revenue growth rates of each of our core service offerings have been and may be impacted by
COVID-19 in the future, depending on our customers’ actual and projected business needs. For example, we
experienced increased demand for our Marketing and Commerce service offering for fiscal 2021 when compared
to prior periods.

Revenues by geography were as follows:

(in millions)

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

Total

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

2021

$14,736
4,501
2,015

$21,252

Fiscal Year Ended January 31,

As a % of
Total
Revenues

2020

69% $12,051
3,430
21
1,617
10

As a % of
Total
Revenues

71%
20
9

Growth
Rate

22%
31
25

100% $17,098

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 Americas revenues was the result of the increasing
acceptance of our services and the investment of additional sales resources. 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 sales resources. Revenues in the Americas and Europe
also benefited from our acquisition of Tableau in August 2019. Foreign currency fluctuations had a minimal
impact on revenues outside of the Americas for fiscal 2021 and 2020.

Cost of Revenues.

(in millions)

Fiscal Year Ended
January 31,

2021

2020

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

$4,154
1,284

$3,198
1,037

Variance
Dollars

$ 956
247

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

$5,438

$4,235

$1,203

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

26%

25%

For fiscal 2021, the increase in cost of revenues was primarily due to an increase of $330 million in

employee-related costs, an increase of $37 million in stock-based expenses, an increase of $275 million in
service delivery costs primarily due to our efforts to increase data center capacity, an increase in amortization of
purchased intangible assets of $222 million and an increase in third party fees and allocated overhead. Service
delivery costs associated with our perpetual and term software licenses are lower than service delivery costs
associated with our cloud service offerings and as a result, our subscription and support gross margin in fiscal
2021 benefited, in part, due to this shift in our business mix.

We have increased our headcount associated with our data centers, customer support, and professional
services by 18 percent since fiscal 2020 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.

Operating Expenses.

(in millions)

Fiscal Year Ended
January 31,

2021

2020

Variance
Dollars

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,598 $ 2,766 $ 832
1,744
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
383
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .
(166)
Loss on settlement of salesforce.org reseller agreement . . . .

7,930
1,704
166

9,674
2,087
0

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,359 $12,566 $2,793

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

72%

73%

For fiscal 2021, the increase in research and development expenses was primarily due to an increase of
approximately $508 million in employee-related costs, an increase of $193 million in stock-based expenses, and
increases in our development and test data center costs and allocated overhead. Our research and development
headcount increased by 11 percent since fiscal 2020 in order to improve and extend our service offerings,
develop new technologies and integrate acquired companies. 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 2021, the increase in marketing and sales expenses was primarily due to an increase of

$1.4 billion in employee-related costs and amortization of deferred commissions, an increase of $89 million in

stock-based expenses, an increase in amortization of purchased intangible assets of $107 million, and allocated
overhead partially offset by a reduction in employee travel and expenses. Marketing and sales expenses for fiscal
2021 were also negatively impacted by the one-time partial minimum commission guarantee offered to our direct
sales force. Our marketing and sales headcount increased by 14 percent since fiscal 2020, primarily attributable
to hiring additional sales personnel to focus on adding new customers and increasing penetration within our
existing customer base. 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. We also
expect an increase in marketing and sales expenses due to the gradual increase of travel and related expenses in
the second half of fiscal 2022.

For fiscal 2021, the increase in general and administrative expenses was primarily due to an increase in
employee-related costs as well as being impacted by our charitable donations to members of our ecosystem and
community. Our general and administrative headcount increased by 12 percent since fiscal 2020 as we added
personnel to support our growth. While not material to date, we may experience increasing credit loss risks from
accounts receivable in future periods depending on the duration or degree of economic slowdown caused by the
COVID-19 pandemic, and our actual experience in the future may differ from our past experiences or current
assessments.

As a result of the June 2019 Salesforce.org business combination, we effectively settled all existing
agreements between ourselves and Salesforce.org and, as part of business combination accounting, accordingly
recorded a one-time, non-cash operating expense charge of approximately $166 million in fiscal 2020 related to
the effective settlement of the reseller agreement.

Other income and expense.

(in millions)

Fiscal Year Ended
January 31,

2021

2020

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

$2,170
(64)

$427
(18)

Variance
Dollars

$1,743
(46)

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 2021 were primarily driven by unrealized gains recognized on
publicly traded equity securities of $1.7 billion and realized gains on sales of equity securities of $0.4 billion.

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 $126 million and $131 million for fiscal 2021 and 2020,
respectively. Investment income decreased $34 million in fiscal 2021, respectively, compared to the same period
a year ago due to lower interest rates across our portfolio, modestly offset by larger cash equivalents and
marketable securities balances. Upon closing of our acquisition of Slack, we expect an increase in interest
expense due to debt agreements we plan to enter into in connection with the pending acquisition.

Benefit from (provision for) income taxes.

(in millions)

Fiscal Year Ended
January 31,

2021

2020

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

$1,511

(59)%

$(580)
82%

Variance
Dollars

$2,091

In fiscal 2021, we recognized a tax benefit of $1.5 billion on a pretax income of $2.6 billion. In the second

quarter of fiscal 2021, we changed our international corporate structure, which included the transfer of certain
intangible property between foreign affiliates resulting in a net tax benefit of $2.0 billion related to foreign
deferred tax assets. The deferred tax assets were recognized as a result of the book and tax basis difference on the
intangible property and were based on the intangible property’s current fair value. The determination of the
estimated fair value of the intangible property is complex and judgmental due to the use of subjective
assumptions in the valuation models used by management. The tax amortization related to the intellectual
property transferred will be recognized in future periods and any amortization that is unused in a particular year
can be carried forward indefinitely under Irish tax laws. The deferred tax asset and the tax benefit were measured
based on the currently enacted Irish tax rate. We believe that it is more likely than not the deferred tax assets will
be realized in Ireland.

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.

Fiscal Year Ended January 31, 2020 and 2019

For a discussion of the year ended January 31, 2020 compared to the year ended January 31, 2019, 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, 2020.

Liquidity and Capital Resources

At January 31, 2021, our principal sources of liquidity were cash, cash equivalents and marketable securities
totaling $12.0 billion and accounts receivable of $7.8 billion. Our 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. Our Revolving Loan Credit Agreement, which provides
the ability to borrow up to $3.0 billion in unsecured financing (“Credit Facility”) as of January 31, 2021, also
serves as a source of liquidity.

As of January 31, 2021, our remaining performance obligation was $36.1 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.

Cash from operations could continue to be affected by various risks and uncertainties, including, but not
limited to, the effects of the COVID-19 pandemic and other risks detailed in Part I, Item 1A titled “Risk Factors.”
We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities,
unbilled amounts related to contracted non-cancelable subscription agreements, which is not reflected on the
balance sheet, and, if necessary, our borrowing capacity under our Credit Facility will be sufficient to meet our
working capital, capital expenditure and debt repayment needs over the next 12 months. In addition, we expect to
have a sufficient combination of available cash and borrowing capacity to fund the aggregate cash portion of the
pending acquisition of Slack, which is expected to be approximately $15.6 billion. Sources of financing
associated with our pending acquisition of Slack are detailed below in “Debt.”

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.

Cash Flows

For fiscal 2021, 2020 and 2019, 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 . . . . . . . . . . . . . .

$ 4,801
(3,971)
1,194

$4,331
(2,980)
164

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

Fiscal Year Ended January 31,

2021

2020

2019

Operating Activities

The net cash provided by operating activities during fiscal 2021 was primarily related to net income of

$4.1 billion, adjusted for non-cash items including $2.0 billion from a one-time discrete tax item from the
recognition of deferred tax assets related to an intra-entity transfer of certain intangible property, $2.8 billion of
depreciation and amortization and $2.2 billion of expenses related to employee stock plans, as well as adjusted
for $2.2 billion of gains on strategic investments. Cash provided by operating activities during fiscal 2021 further
benefited by the change in unearned revenue of $1.9 billion, offset by a change in accounts receivable, net of
$1.6 billion. Cash provided by operating activities during fiscal 2021 was negatively impacted by changes in
billing frequency for new business due to the COVID-19 pandemic. In addition, our operating cash flows were
negatively impacted by investments made in our go-to-market efforts, such as the partial minimum commission
guarantee provided in the first quarter of fiscal 2021.

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 related to depreciation and amortization,
$1.8 billion of expenses related to employee stock plans and discrete one-time non-cash adjustments.

Investing Activities

The net cash used in investing activities during fiscal 2021 was primarily related to cash consideration for

the acquisition of Vlocity, net of cash acquired, of approximately $1.2 billion as well as purchases of marketable
securities of $4.8 billion, partially offset by sales and maturities of marketable securities of $2.9 billion. In
addition, we paid approximately $150 million of cash consideration related to the purchase of the property
located at 450 Mission Street (“450 Mission”) in San Francisco, CA, which is reflected in capital expenditures.

The net cash used in investing activities during fiscal 2020 was primarily related to the purchases of
marketable securities of $3.9 billion, offset by sales and maturities of marketable securities of $2.2 billion. In
addition, we paid approximately $0.4 billion of cash consideration, net of cash acquired, for business
combinations during fiscal 2020.

Financing Activities

Net cash provided by financing activities during fiscal 2021 consisted primarily of $1.3 billion from

proceeds from equity plans.

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 our senior
unsecured term loan facility that would have matured in April 2021, and principal payments on financing
obligations of $173 million.

Debt

As of January 31, 2021, 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 our

purchase of an office building located at 50 Fremont Street in San Francisco (“50 Fremont”), due in 2023 with a
total carrying value of $190 million. We were in compliance with all debt covenants as of January 31, 2021.

In December 2020, we entered into a credit agreement (the “Revolving Loan Credit Agreement”), which
provides for a $3.0 billion unsecured revolving credit facility (the “Credit Facility”) that matures in December
2025, replacing our previous $1.0 billion revolving credit facility. There were no outstanding borrowings under
the Credit Facility as of January 31, 2021. We may use the proceeds of future borrowings under the Credit
Facility for general corporate purposes, which may include, without limitation, financing the considerations for
and fees, costs and expenses related to any acquisition.

In addition, in connection with our pending acquisition of Slack, in December 2020, we obtained

commitments from certain financial institutions for a 364-day senior unsecured bridge loan facility (the “Bridge
Facility”). The original commitments in respect of the Bridge Facility were $10.0 billion, but were reduced to
$7.0 billion in December 2020 following our entry into a $3.0 billion three-year senior unsecured loan agreement
(“Acquisition Term Loan”), the proceeds of which may be used to finance a portion of the cash consideration for
our pending acquisition of Slack, for the repayment of certain debt of Slack to pay fees, costs and expenses
related thereto. In February 2021, we elected to further reduce our Bridge Facility commitments to $4.0 billion.
The availability and funding of the Bridge Facility and the Acquisition Term Loan are conditioned on the
consummation of the acquisition of Slack in accordance with the terms of the merger agreement and are subject
to certain exceptions, qualifications and certain other conditions. We may further reduce the commitments in
respect of the Bridge Facility prior to the consummation of the acquisition, all or a portion of which may be in
connection with the issuance of one or more series of senior secured debt securities or other incurrences of new
indebtedness or commitments in respect thereof.

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. For more information regarding our lease obligations, see Note 6 “Leases and Other Commitments”
to the consolidated financial statements in Item 8 of Part II. In addition, we have a substantial level of debt. For
more information regarding our debt service obligations, see Note 9 “Debt” to the consolidated financial
statements in Item 8 of Part II. As of January 31, 2021, our other contractual commitments associated with
agreements that are enforceable and legally binding and that specify all significant terms were payments of
$0.6 billion due in the next 12 months and $1.9 billion due thereafter. We expect to fund these obligations with
cash flows from operations and cash on our balance sheet.

During fiscal 2021 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. While we
continue to make investments in our infrastructure including offices, information technology and data centers to
provide capacity for the growth of our business, our strategy may continue to change related to these investments
and we may slow the pace of our investments including in response to the known and potential impacts of
COVID-19 on our business.

Other Future Obligations

In December 2020, we entered into a definitive agreement to acquire Slack. Under the terms of the
agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for
each outstanding share of Slack Class A and Class B common stock, resulting in an estimated $15.6 billion of
cash consideration and 45 million shares to be issued, based on Slack Class A and Class B shares outstanding as

of January 31, 2021. The agreement also provides for the assumption of outstanding equity awards held by Slack
employees. We expect to fund the cash portion of the consideration with a combination of new debt, as discussed
above, and cash on our balance sheet.

In February 2021, we acquired all outstanding stock of Acumen Solutions, Inc. (“Acumen”) for

approximately $433 million, in cash.

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. 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. We
believe that values drive value, and that effectively managing our priority Environmental, Social, and
Governance (“ESG”) topics will help create long-term value for our investors. We also believe that transparently
disclosing the goals and relevant metrics related to our ESG programs will allow our stakeholders to be informed
about our progress.

The topics covered in this section are informed by an internal ESG materiality assessment completed in
fiscal 2020, which assessed both the impact on our business and the importance to our stakeholders, as well as by
relevant topics identified through third-party ESG reporting frameworks, standards and metrics, such as the
Sustainability Accounting Standards Board (“SASB”), and the Task Force on Climate-Related Financial
Disclosures (“TCFD”). More information on our key ESG programs, goals and commitments, and key metrics
can be found on our website in our annual Stakeholder Impact Report.

Our ESG highlights as of the fiscal year ended January 31, 2021 include the following:

COVID-19 Response. In fiscal 2021 we mobilized to support our employees, our customers and our communities
in response to the COVID-19 pandemic in a number of ways.

•

Protecting our workforce. In an effort to protect the safety and well-being of our employees, we closed
our offices around the world and provided an allowance for employees to use for equipment to improve
their ability to work from home. We provided regular communication and updates to employees,
including through company-wide video calls led by senior management, with participation of Board
members and guest experts in psychology and other medical fields throughout fiscal 2021.
Additionally, we expanded our leave programs to include accommodations for child or elder care
hardships during the pandemic.

Innovation and customer support. To support our customers, we launched Work.com, which includes
new solutions designed to help our customers reopen safely. We also launched Work.com for schools
to help schools reopen safely and Vaccine Cloud to help governments and healthcare organizations
more safely and efficiently manage vaccine programs at scale.

Supporting our communities. In fiscal 2021, we took action to help address the Personal Protective
Equipment (“PPE”) shortage facing medical personnel by sourcing millions of units of PPE for doctors,
nurses and first responders in the United States and other countries.

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.

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 and our privacy
policies (which are 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 General Data Protection Regulation and the California Consumer Privacy Act.

Equality. We invest in programs designed to enhance employee success and create a safe, healthy and engaging
working environment that fosters our core value of equality for all. Refer to our “Human Capital Management”
Section in Item 1 of Part I for details.

Racial Equality and Justice Task Force. In fiscal 2021 we launched our Racial Equality and Justice Task Force
to help drive systemic change in our workplace and community. To create the task force, we invited employees
from across the business, as well as leaders of our Black employee resource group, to help guide our vision,
which includes our focus on the four pillars of “People, Purchasing, Philanthropy and Policy.” Our vision and
goals have been formalized in a new Racial Equality and Justice V2MOM, which is an internal management tool
that incorporates our vision, values, methods, obstacles and measures.

Ethical and Humane Use. We recognize the transformative power of technologies and the importance of
ensuring their ethical and humane use. Core to this effort is our Office of Ethical and Humane Use of
Technology, which works across product, law, policy and ethics to develop and implement strategic frameworks
across the company for the responsible design, development and use of Salesforce technologies. We regularly
engage with stakeholders and experts in the field to further this effort. We also rely on our Ethical Use Advisory
Council, composed of diverse frontline and executive employees, as well as external academics, industry experts
and society leaders, to navigate how we mitigate risk and avoid harmful unintended consequences.

Civic Engagement. We work with policymakers and elected officials around the globe on issues that matter to
our stakeholders, including our employees, our customers, our stockholders, our communities and the
environment. Salesforce is nonpartisan in our work, and we support candidates and eligible organizations of any
party who share our priorities, align with our core values, represent and engage with significant numbers of our
employees and demonstrate leadership. We are committed to complying with all laws, rules and regulations
relevant to our political activity and we publicly disclose all contributions in the U.S. in reports filed with the
Federal Election Commission and with various state campaign finance commissions. Our Governance Committee
provides independent oversight and annually reviews our political contributions. Management prepares a detailed
annual report of our corporate political spending, which is publicly accessible at https://www.salesforce.com/
company/public-policy/.

Supporting Our Communities. Giving back is foundational to our corporate culture and our core value of
equality. In the fiscal year ended January 31, 2021, together with the Salesforce Foundation, a 501(c)(3)
non-profit organization, our social value contribution include the following:

• Approximately $1.4 billion in donated or discounted products provided to non-profits and higher

education institutions via Salesforce.org. We calculate the social value of products sold or donated
based on the estimated price we would have received if a comparable product was sold to a for-profit
business of similar size and location, less the price that we received, if any, for the same product from a
qualified non-profit educational institution or other Non-Government Organization (“NGO”). When a
comparable Salesforce product price was not readily available, we used a ratio based on the weighted
average of the Salesforce price to a for-profit company compared to the Salesforce price to a non-profit
company.

• Approximately $100 million in grants and donations to qualified non-profits, educational institutions or

other NGOs in fiscal 2021.

In addition, our employees volunteered over 800,000 hours in fiscal 2021.

Climate Action. Salesforce continues to support science-based climate policies and decarbonization actions
intended to limit the global average temperature increase to 1.5°C above pre-industrial levels.

•

In fiscal 2021 our absolute location-based GHG emissions declined one percent relative to fiscal 2020.
Market-based emissions, which include the net carbon reductions associated with our renewable energy
procurement, declined by 40 percent over the same period. In fiscal 2021, we procured electricity from
renewable energy resources equivalent to approximately 75 percent of what we used globally. We
continued to support new efforts to decarbonize regional energy grids through our first international
Virtual Power Purchase Agreement (“VPPA”) in Australia. This VPPA supports our ambition to
achieve our 100 percent renewable energy goal by 2022.

• As part of our 1.5°C Science-Based Target, we made a commitment that suppliers representing 60% of

our Scope 3 emissions will set Science-Based Targets of their own. As of January 31, 2021 and
January 31, 2020, 49 and 19 of our suppliers had set or committed to Science-Based Targets,
respectively. In addition, in fiscal 2021 we delivered all customers a carbon neutral cloud, offset all
operational emissions and offset all emissions associated with business travel and employee
commuting.

•

In January 2020, as a founding partner of 1t.org, and in support of its mission, Salesforce announced
our goal to support and mobilize the conservation, restoration and growth of 100 million trees by the
end of 2030.

While we believe all of these goals align with our long-term growth strategy and financial and operational

priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in foreign currency exchange rates, interest
rates and equity investment risks. This exposure has increased due to recent financial market movements and
changes to our expectations of near-term possible movements caused by the impact of COVID-19 as discussed in
more detail below.

Foreign Currency Exchange Risk

We primarily conduct our business in the following locations: the United States, Europe, Canada, Latin

America, Asia Pacific and Japan. The expanding global scope of our business exposes us to the risk of
fluctuations in foreign currency markets, including emerging 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, Japanese Yen, Canadian
Dollar, Australian Dollar and Brazilian Real against the United States Dollar (“USD”). These exposures may
change over time as business practices evolve and economic conditions change, including market impacts
associated with COVID-19. Changes in foreign currency exchange rates could have an adverse impact on our
financial results and cash flows.

In fiscal 2020, we began transitioning away from our 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, is expected to enable 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”). In December 2020, a trade

agreement was entered into between the UK and the EU and in January 2021, the transition period ended and the
UK was no longer subject to EU rules or regulations. Brexit and the new UK-EU trade agreement 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 2021 and 2020, revenues generated in Europe were approximately 21 percent and
20 percent of total revenues, respectively, of which most are recorded in our UK, Germany, France, Italy, Spain
and Ireland subsidiaries. Revenues in Europe had a minimal favorable impact in fiscal 2021 compared to fiscal
2020 as a result of fluctuations in the Euro and British Pound Sterling against the USD. 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.

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, 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 throughout the year, the amounts of revenue
that we reported in USD for foreign subsidiaries that transact in international currencies were similar to what we
would have reported during fiscal 2020 using a constant currency rate. However, fluctuations in USD against
certain international currencies over the past several months modestly benefited our remaining performance
obligation as of January 31, 2021 compared to what we would have reported as of January 31, 2020 using
constant currency rate.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $12.0 billion as of January 31, 2021. 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 expectations 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 due to expected credit losses.

Our fixed-income portfolio is also subject to interest rate risk. An immediate increase or decrease in interest

rates of 100 basis points at January 31, 2021 could result in a $63 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, 2020, we had cash, cash equivalents and marketable securities totaling $7.9 billion. Changes

in interest rates of 100 basis points would have resulted in market value changes of $38 million.

Market Risk and Market Interest Risk

We deposit our cash with multiple financial institutions.

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, 2021

Interest
Terms

Effective Interest Rate
for Fiscal 2021

Bridge Facility . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition Term Loan . . . . . . . . . . . . . . . . .
April 2023
2023 Senior Notes . . . . . . . . . . . . . . . . . . . . .
April 2028
2028 Senior Notes . . . . . . . . . . . . . . . . . . . . .
Loan assumed on 50 Fremont . . . . . . . . . . . .
June 2023
Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . December 2025

N/A (1)
N/A (2)

0
0
1,000
1,500
190
0

Floating
Floating
Fixed
Fixed
Fixed
Floating

N/A
N/A
3.26%
3.70%
3.75%
N/A

(1) Maturity date will be 364 days following the closing of the pending Slack acquisition.
(2) Maturity date is three years following the closing of the pending Slack acquisition.

Any borrowings under the Bridge Facility will bear interest, at our option, at a base rate plus a spread of
0.00% to 0.875% or an adjusted LIBOR rate plus a spread of 0.50% to 1.125%, in each case with such spread
being determined based on our credit ratings from time to time and subject to increases of 0.25% on each of the
90th, 180th and 270th day following the initial funding of the Bridge Facility. As of January 31, 2021, there was
no outstanding borrowing amounts under the Bridge Facility.

Any borrowings under our Acquisition Term Loan bear interest, at our option, at a base rate plus a spread of

0.00% to 0.125% or an adjusted LIBOR rate plus a spread of 0.50% to 1.125%, in each case with such spread
being determined based on our credit ratings from time to time. Our Acquisition Term Loan 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. As of January 31, 2021, there was no
outstanding borrowing amount under the Acquisition Term Loan.

The borrowings under our Credit Facility bear interest, at our option, at a base rate plus a spread of 0.00% to

0.125% or an adjusted LIBOR rate plus a spread of 0.50% to 1.125%, in each case with such spread being
determined based on our credit rating. Our 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. We are also obligated to pay an ongoing commitment fee on undrawn
amounts. As of January 31, 2021, 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 ongoing 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, including in emerging markets. We primarily invest in enterprise cloud companies, technology
startups and system integrators to advance 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. Our strategy includes using proceeds from realized gains
recognized on the sales of our existing strategic investments to, in part, fund these new strategic investments.

As of January 31, 2021, our portfolio consisted of investments in over 280 companies, with capital investments

ranging from less than $0.3 million to approximately $335 million, and 40 investments with carrying values
individually equal to or in excess of approximately $10 million. As of January 31, 2021, we held one publicly traded
investment with a carrying value that was approximately 35 percent of our total strategic investments, one publicly
traded investment with a carrying value that was greater than 15 percent of our total strategic investments, and one
privately held investment with a carrying value greater than five percent of our strategic investment portfolio.

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

strategic investment portfolio as of January 31, 2021 and excludes exited investments (in millions):

Investment Type

Capital
Invested

Unrealized Gains
(Cumulative)

Unrealized Losses
(Cumulative)

Carrying Value as of
January 31, 2021

Publicly held equity securities . . . . . . . . . . . . . . $ 418
1,720
Privately held equity securities . . . . . . . . . . . . .

Total equity securities . . . . . . . . . . . . . . . . . . . . $2,138

$1,650
318

$1,968

0
(248)

$(248)

$2,068
1,790

$3,858

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 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. Volatility in the global market conditions, including recent and
ongoing volatility related to the impacts of COVID-19 and related public health measures, may impact our
investment portfolio and our financial results may fluctuate from historical results and expectations.

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 enterprise value of the company. As a result, our investment value in a specific
company may move by more or less than any change in value of that overall company. An immediate decrease of
ten percent in enterprise value of our publicly traded and significant privately held equity securities held as of
January 31, 2021, which represents 74 percent of the strategic investment portfolio, could result in a $272 million
reduction in the value of our 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. One of our publicly traded investments, which individually had a carrying
value of approximately 35 percent of our total strategic investment portfolio, is subject to lock-up agreements
until March 2021, for the investment made prior to their initial public offering (“IPO”) and September 2021 for
the investment made concurrent with their IPO. A portion of our holdings was released from the lock-up
agreement early as certain criteria were met.

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. The rapid spread of COVID-19 and its reverberating effects on
the global economy have caused disruptions to the industry and to financial markets that are inhibiting and may
continue to inhibit the ability of investee companies to complete a liquidity event. In severe cases, our investee
companies may no longer be able to operate or could experience reduced profitability, delayed public offerings,
reduced ability to raise favorable rounds of financing, or acquisitions at less favorable terms. These outcomes
could have a material adverse affect on the Company’s financial position, results of operations and cash flows.

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.

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, 2021 and 2020, 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, 2021, and the
related notes (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, 2021 and 2020, and
the results of its operations and its cash flows for each of the three years in the period ended January 31, 2021, 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, 2021, 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 17, 2021 expressed
an unqualified opinion thereon.

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.

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.

Description of
the Matter

Income Taxes – Valuation of Intellectual Property included in International Corporate
Structure Change

As discussed in Note 11 to the financial statements, the Company changed its international
corporate structure in the year ended January 31, 2021, which included the transfer of certain
intangible property to Ireland resulting in a net tax benefit of $2.0 billion related to foreign
deferred tax assets. The determination of the estimated fair value of the intangible property is
complex and judgmental due to the use of subjective assumptions in the valuation models used
by management. The estimated fair value serves as the tax basis of the deferred tax asset.

Auditing management’s valuation of the intangible property is complex due to the effort and
auditor judgment required to evaluate management’s assumptions.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over management’s development of the assumptions used in the valuation models
applied in determining the fair value of the intangible property.

To test the estimated fair value of the intangible property, we performed audit procedures that
included, among others, testing the significant assumptions used in the valuation models,
including validating the completeness and accuracy of the underlying data supporting the
assumptions and estimates. We 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 own forecasts. In addition, we
involved our valuation specialists and tax professionals 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 17, 2021

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, 2021,
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, 2021, based on the COSO criteria.

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, 2021 and 2020, 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, 2021, and the related notes, and our report dated
March 17, 2021 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
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 17, 2021

salesforce.com, inc.

Consolidated Balance Sheets
(in millions)

January 31,
2021

January 31,
2020

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, net
Noncurrent costs capitalized to obtain revenue contracts, net . . . . . . . . . . . . . . . . . . . . . .
Strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets acquired through business combinations, net . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets and other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,195
5,771
7,786
1,146
991

21,889
2,459
3,204
1,715
3,909
26,318
4,114
2,693

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

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

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

$66,301

$55,126

Liabilities and stockholders’ equity
Current liabilities:

Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,355
766
12,607

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

17,728
2,673
2,842
1,565

24,808

$ 3,433
750
10,662

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

21,241

Commitments and contingencies (See Notes 6 and 14)
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, 919 and 893 issued and
outstanding at January 31, 2021 and 2020, respectively . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
35,601
(42)
5,933

1
32,116
(93)
1,861

33,885

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

41,493

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

$66,301

$55,126

See accompanying Notes.

salesforce.com, inc.

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

Fiscal Year Ended January 31,

2021

2020

2019

Revenues:

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

$19,976
1,276
21,252

$16,043
1,055
17,098

$12,413
869
13,282

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 . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on strategic investments, net (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before benefit from (provision for) income taxes . . . . . . . . . . . . . . . . . . . .
Benefit from (provision for) income taxes (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . .

4,154
1,284
5,438
15,814

3,598
9,674
2,087
0
15,359
455
2,170
(64)
2,561
1,511
$ 4,072

$
$

4.48
4.38
908
930

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

$
$

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

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

662
459

440
352

215
232

Fiscal Year Ended January 31,

2021

2020

2019

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

Fiscal Year Ended January 31,

2021

2020

2019

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

241
703
941
305

204
510
852
219

161
307
643
172

(3) During fiscal 2021, two of the Company’s strategic investments completed their initial public offering,

resulting in an unrealized gain of $1.7 billion as of January 31, 2021.

(4) Amounts include approximately $2.0 billion of one-time benefit from a discrete tax item related to the

See accompanying Notes.

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,

2021

2020

2019

$4,072

$126

$1,110

(59)

55
(4)

(33)
(2)

(35)

(26)

(12)

(38)
(1)

(39)

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

$4,123

$ 91

$1,071

See accompanying Notes.

salesforce.com, inc.

Consolidated Statements of Stockholders’ Equity
(in millions)

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

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

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

Settlement of convertible notes and

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

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

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

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

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

Balance at January 31, 2020 . . . . . . . . . . . .
Common stock issued . . . . . . . . . . . . .
Stock-based expense . . . . . . . . . . . . . .
Other comprehensive income, net of

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

Common Stock

Shares Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Total
Stockholders’
Equity

730

$ 9,752

$(12)

$ 635

$10,376

0
21

6
0

0
0

770
21

102
0

0
0

893
26
0

0
0

1
0

0
0

1
0
0

0
0

0
695

2,195

4
1,281

0
0

13,927
816

15,588
1,785

0
0

32,116
1,295
2,190

0
0

(7)
0

0
0

(39)
0

(58)
0

0
0

(35)
0

(93)
0
0

51
0

(10)
0

0
0

0
1,110

1,735
0

0
0

0
126

1,861
0
0

0
4,072

(17)
695

2,195

4
1,281

(39)
1,110

15,605
816

15,588
1,785

(35)
126

33,885
1,295
2,190

51
4,072

Balance at January 31, 2021 . . . . . . . . . . . .

919

$35,601

$(42)

$5,933

$41,493

See accompanying Notes.

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:

Fiscal Year Ended January 31,

2021

2020

2019

$ 4,072

126 $ 1,110

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 . . . . . . . . . . . . . . . . . .
Gains on strategic investments, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit from intra-entity transfer of intangible property
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 and accrued expenses and other liabilities . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,846
1,058
2,190
0
(2,170)
(2,003)

(1,556)
(1,645)
(133)
1,100
(830)
1,872

2,135
876
1,785
166
(427)
0

(1,000)
(1,130)
(119)
982
(728)
1,665

982
737
1,283
0
(542)
0

(923)
(981)
(58)
287
0
1,503

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

4,801

4,331

3,398

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

(1,281)
(1,069)
1,051
(4,833)
1,836
1,035
(710)

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

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

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

(3,971)

(2,980)

(5,308)

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

(20)
1,321
(103)
(4)

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

1,194

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

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

2,050
4,145

0
840
(173)
(503)

164

(39)

1,476
2,669

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

2,010

126
2,543

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

$ 6,195

$ 4,145 $ 2,669

See accompanying Notes.

salesforce.com, inc.

Consolidated Statements of Cash Flows

Supplemental Cash Flow Disclosure
(in millions)

Fiscal Year Ended January 31,

2021

2020

2019

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

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

$ 96
$216

Non-cash investing and financing activities:

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

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

$
$

106
129

$
$

94
83

373

$ 480

$15,215

$1,715

See accompanying Notes.

salesforce.com, inc.

Notes to Consolidated Financial Statements

1. Summary of Business and Significant Accounting Policies

Description of Business

Salesforce (the “Company”) is a global leader in customer relationship management (“CRM”) technology
that brings companies and customers together. With the Customer 360 platform, the Company delivers a single
source of truth, connecting customer data across systems, apps and devices to help companies sell, service,
market and conduct commerce, from anywhere. Since its founding in 1999, Salesforce has pioneered innovations
in cloud, mobile, social, analytics and artificial intelligence (“AI”), enabling companies of every size and
industry to transform their businesses in the all-digital, work-from-anywhere era.

Fiscal Year

The Company’s fiscal year ends on January 31. References to fiscal 2021, for example, refer to the fiscal

year ending January 31, 2021.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make

estimates and assumptions in the Company’s consolidated financial statements and notes thereto.

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

•

the 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, including impairments;

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.

In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was reported and in March

2020 the World Health Organization declared it a pandemic. The extent of the impact of the COVID-19
pandemic on the Company’s operational and financial performance depends on certain developments, including
the duration of the pandemic, the impact on the Company’s customers and its sales and renewal cycles, and the
impact on the Company’s employees, as discussed in more detail in Part II, Item 7 “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.” As a result, the estimates and assumptions used
by the Company may change, as new events occur and additional information is obtained, and such changes will
be recognized in the consolidated financial statements as soon as they become known. Actual results could differ
from these estimates and any such differences may be material to the Company’s financial statements.

Principles of Consolidation

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

Segments

The Company operates as one operating segment. Operating segments are defined as components of an
enterprise for which separate financial information is evaluated regularly by the chief operating decision maker
(“CODM”), in deciding how to allocate resources and assess performance. 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 service offerings operate on the Customer 360 Platform, most
of the Company’s service offerings are deployed in a nearly identical way, and the Company’s CODM evaluates
the Company’s financial information and resources and assesses the performance of these resources on a
consolidated basis.

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 due to estimated credit
losses. This allowance is based upon historical loss patterns, the number of days that billings are past due, an
evaluation of the potential risk of loss associated with delinquent accounts and current market conditions and
reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss
patterns. The Company records the allowance against bad debt expense through the consolidated statement of
operations, included in general and administrative expense, up to the amount of revenues recognized to date. Any
incremental allowance is recorded as an offset to unearned revenue on the consolidated balance sheet.
Receivables are written off and charged against the recorded allowance when the Company has exhausted
collection efforts without success.

No single customer accounted for more than five percent of accounts receivable at January 31, 2021 and
January 31, 2020. No single customer accounted for five percent or more of total revenue during fiscal 2021,
2020 and 2019. As of January 31, 2021 and January 31, 2020, assets located outside the Americas were
15 percent and 12 percent of total assets, respectively. As of January 31, 2021 and January 31, 2020, assets
located in the United States were 82 percent and 87 percent of total assets, respectively.

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

January 31, 2021, the Company held one publicly traded investment with a carrying value that was
approximately 35 percent of its total strategic investments, one publicly traded investment with a carrying value
greater than 15 percent of its total strategic investments, and one privately held investment with a carrying value
that was individually greater than five percent of its strategic investment portfolio. The two publicly held
investments represented 53 percent of the total balance of the Company’s strategic investments as of January 31,
2021. As of January 31, 2020, the Company held five investments that were individually greater than five percent
of its total strategic investments, of which one was publicly traded and four were 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;

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 include revenues associated with term
software licenses. On-premises software licenses purchased by customers provide the customer with a right to
use the software as it exists when made available. 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, the allocated 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 distinct.

The Company allocates the transaction price to each performance obligation on a relative 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 non-cancelable Cloud Services subscription,
ongoing Cloud Services support and license support revenue contracts. For contracts with on-premises software
licenses where revenue is recognized upfront when the software is made available to the customer, costs
allocable to those licenses are expensed as they are incurred. 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 (4) to a lesser extent, 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 is longer than the typical initial contract period, but reflects the estimated 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 2021, the Company capitalized $1.6 billion of costs to obtain revenue contracts and amortized
$1.1 billion to marketing and sales expense. 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 fiscal 2021 the
Company offered its direct sales force a partial minimum commission guarantee that would pay the greater of
actual commissions earned or a fixed amount of their variable compensation that would have otherwise been paid
during the three months ended April 30, 2020 if incremental new business had not been impacted by the
COVID-19 pandemic. As these payments were guaranteed, and not a cost to obtain a revenue contract, the
amounts were immediately expensed and are reflected in the Company’s consolidated statement of operations for
fiscal 2021. Costs capitalized to obtain a revenue contract, net on the Company’s consolidated balance sheets
totaled $2.9 billion as of January 31, 2021 and $2.3 billion as of January 31, 2020. There were no impairments of
costs to obtain revenue contracts for fiscal 2021 and 2020, respectively.

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.
Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount
of the excess, if any, is caused by expected credit losses, as required by new accounting pronouncement,
Accounting Standards Update No. 2016-13 (“ASU 2016-13”), discussed in further detail below. Expected credit
losses on securities are recognized in other income (expense), net on the consolidated statements of operations,
and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive loss in
stockholders’ equity. 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 within other expense.

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.

Privately held equity securities which the Company does not have a controlling financial interest in but does

exercise significant influence over the investee are accounted for under the equity method. Privately held equity
securities not accounted for under the equity method 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 comprehensive income on the consolidated balance
sheet.

Valuations of privately held securities are inherently complex and require judgment due to the lack of

readily available market data. 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.

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 4 “Fair Value Measurement.”

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, Canadian Dollar, Australian Dollar and
Japanese Yen. 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.
Outstanding foreign currency derivative contracts are 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. The notional
amount of foreign currency derivative contracts as of January 31, 2021 and 2020 was $5.3 billion and
$5.5 billion, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. 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

Buildings and building improvements . . . . . . .

lease term or 10 years
10 to 40 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.

Leases

The Company determines if an arrangement is a lease at inception and classifies its leases at

commencement. 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. Assets recognized from
finance leases (also referred to as “ROU” assets) are included in property and equipment, accrued expenses and
other liabilities and other noncurrent liabilities, respectively, on the Company’s consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term. The corresponding lease
liabilities represent its obligation to make lease payments arising from the lease. The Company does not
recognize ROU assets or lease liabilities for leases with a term of 12 months or less for any asset classes.

Lease liabilities are recognized based on the present value of the future minimum lease payments over the

lease term at commencement, net of any future tenant incentives. The Company has lease agreements which
contain both lease and non-lease components, which it has elected to combine for all asset classes. As such,
minimum lease payments include fixed payments for non-lease components within a lease agreement, but
exclude variable lease payments not dependent on an index or rate, such as common area maintenance, operating
expenses, utilities, or other costs that are subject to fluctuation from period to period. The Company’s lease terms
may include options to extend or terminate the lease. Periods beyond the noncancellable term of the lease are
included in the measurement of the lease liability when it is reasonably certain that the Company will exercise
the associated extension option or waive the termination option. The Company reassesses the lease term if and
when a significant event or change in circumstances occurs within the control of the Company. As most of 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 an
estimate of the interest rate the Company would have to pay to borrow on a collateralized basis with similar
terms and payments, in the economic environment where the leased asset is located.

The lease ROU asset is recognized based on the lease liability, adjusted for any rent payments or initial

direct costs incurred or tenant incentives received prior to commencement.

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

On the lease commencement date, the Company also 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
included in property and equipment and are amortized over the lease term to operating expense.

The Company has entered into subleases or has made decisions and taken actions to exit and sublease

certain unoccupied leased office space. Similar to other long-lived assets discussed below, management tests

ROU assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. For leased assets, such circumstances would include the decision to leave a
leased facility prior to the end of the minimum lease term or subleases for which estimated cash flow do not fully
cover the costs of the associated lease.

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.

In fiscal 2021 the Company recorded approximately $216 million of impairments to assets associated with

real estate leases in select locations it has decided to exit. There were no other material impairments of intangible
assets, long-lived assets or goodwill during fiscal 2021, 2020 and 2019, 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, tax-related
valuation allowances and pre-acquisition contingencies 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 generally recognize a gain or loss to settle that relationship as of the acquisition date within
operating income on 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.

Stock-Based Expense

Stock-based expenses are measured based on grant date at fair value using the Black-Scholes option pricing

model for stock options and the grant date closing stock price for restricted stock awards. 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 from the lower of the Company’s stock price on (i) the first day of the offering period or on (ii) the last
day of the purchase period and also allows employees to reduce their percentage election once during a
six-month purchase period (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 reset 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 and
other members of senior management and vest, if at all, based on the Company’s performance over a three-year
period relative to the Nasdaq 100. Performance share grants 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, based on the
closing stock price on grant date, 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 $787 million, $660 million and $482 million

for fiscal 2021, 2020 and 2019, 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. 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. 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 period.

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 Pronouncement Adopted in Fiscal 2021

In June 2016, the Financial Accounting Standards Board (FASB) issued 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, and
includes the Company’s accounts receivable, certain financial instruments and contract assets. ASU 2016-13
results in more timely recognition of credit losses. Effective on February 1, 2020, the Company adopted the
provisions and expanded disclosure requirements described in ASU 2016-13. The adoption of ASU 2016-13 was
not material to the consolidated financial statements.

Accounting Pronouncement Pending Adoption

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic
740): Simplifying the Accounting for Income Taxes,” 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. ASU 2019-12 will be effective for fiscal 2022, including interim periods
within that reporting period. The Company does not expect the adoption of ASU 2019-12 to be material.

Reclassifications

Certain reclassifications to fiscal 2020 and fiscal 2019 balances were made to conform to the current period
presentation in the consolidated statements of cash flows. These reclassifications did not impact the Company’s
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,

2021

2020

2019

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

$ 5,191
5,377
6,275
3,133

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

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

$19,976

$16,043

$12,413

Total Revenue by Geographic Locations

Revenues by geographical region consisted of the following (in millions):

Fiscal Year Ended January 31,

2021

2020

2019

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

$14,736
4,501
2,015

$12,051
3,430
1,617

$ 9,445
2,553
1,284

$ 21,252

$ 17,098

$13,282

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
95 percent during fiscal 2021 and 96 percent during fiscal 2020 and 2019, respectively. No other country
represented more than ten percent of total revenue during fiscal 2021, 2020 and 2019 respectively.

Contract Balances

Contract Assets

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 $477 million as of January 31,
2021 as compared to $449 million as of January 31, 2020, and are included in prepaid expenses and other current
assets and deferred tax assets and other assets, net on the consolidated balance sheet. Impairments of contract
assets were immaterial during fiscal 2021, 2020 and 2019, 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,

2021

2020

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

$ 10,662
23,096
28
(19,188)
(767)
(1,297)
73

$ 8,564
18,662
101
(15,586)
(716)
(796)
433

Unearned revenue, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 12,607

$ 10,662

(1) Other includes, for example, the impact of foreign currency translation.

Revenue recognized ratably over time is generally billed in advance and includes Cloud Services and the

related support and advisory services. The majority of revenue recognized for these services is from the
beginning of period unearned revenue balance.

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-premises software licenses.

Approximately 50 percent of total revenue recognized in fiscal 2021 is from the unearned revenue balance

as of January 31, 2020.

Remaining Performance Obligation

Remaining performance obligation represents contracted revenue that has not yet been recognized and
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 software license deliveries, average contract terms and foreign currency
exchange rates. Remaining performance obligation is also impacted by acquisitions. 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 obligations 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, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$18.0
$15.0

$18.1
$15.8

$36.1
$30.8

Current

Noncurrent

Total

3. Investments

Marketable Securities

At January 31, 2021, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Covered bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

Total marketable securities . . . . . . . . . . . . . . . . . . . . .

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

$3,321
205
382
1,096
242
328
164

$5,738

$20
1
5
6
2
0
0

$34

$ 0
0
0
(1)
0
0
0

$(1)

$3,341
206
387
1,101
244
328
164

$5,771

At January 31, 2020, marketable securities consisted of the following (in millions):

Investments Classified as Marketable Securities

Total marketable securities . . . . . . . . . . . . . . . . . . . . .

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

$2,199
182
225
779
157
165
82

$3,789

$ 9
1
1
2
1
0
0

$14

$(1)
0
0
0
0
0
0

$(1)

$2,207
183
226
781
158
165
82

$3,802

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

$2,525
3,236
10

$1,332
2,466
4

$5,771

$3,802

As of January 31,

2021

2020

Strategic Investments

Strategic investments by form and measurement category as of January 31, 2021 were as follows (in

millions):

Measurement Category

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,068
0

Total strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,068

$1,670
0

$1,670

Fair Value

Measurement
Alternative

Other

Total

$120
51

$3,858
51

$171

$3,909

Strategic investments by form and measurement category as of January 31, 2020 were as follows (in

millions):

Total strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Measurement Category

Fair Value

Measurement
Alternative

$370
0

$370

$1,502
0

$1,502

Other

Total

$40
51

$91

$1,912
51

$1,963

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,

2021

2020

$1,502

$ 785

Net additions (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Upward adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and downward adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96
169
(97)

507
280
(70)

Carrying amount, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,670

$1,502

(1) Net additions include additions from purchases and reductions due to exits of securities and reclassifications

due to changes to capital structure.

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. The investment was accounted for using the measurement
alternative. In June 2020, the Company made a strategic investment of $100 million in cash for preferred shares
of a different technology company in a preferred stock financing. The investment was accounted for using the
measurement alternative.

In July 2020, one of the Company’s investments, which was previously accounted for under the
measurement alternative, completed its initial public offering (“IPO”), resulting in a change of accounting
methodology to fair value and the recognition of an unrealized gain of $537 million for the fiscal year ended
January 31, 2021, which is reflected in the table below. As of January 31, 2021, the carrying value of the
Company’s remaining investment was $0.7 billion.

In September 2020, one of the Company’s investments, which the Company previously accounted for under

the measurement alternative, completed its IPO, which resulted in a change of accounting methodology to fair
value. Concurrent with the IPO, the Company invested an additional $250 million. As of January 31, 2021, the
Company recognized an unrealized gain of $1.2 billion on this investment, which is reflected in the table below.
The investment concurrent with the IPO is subject to a lock-up agreement in which the Company’s ability to sell
is restricted until September 2021, while the remainder of the Company’s investment is subject to a lock-up
agreement until March 2021. As of January 31, 2021, the carrying value of the Company’s remaining investment
was $1.4 billion.

Since the adoption of ASU 2016-01 on February 1, 2018, cumulative impairments and downward

adjustments were $238 million and cumulative upward adjustments were $314 million through January 31, 2021
for measurement alternative investments still held as of January 31, 2021.

Gains 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

$1,743
77
367
(17)

$138
208
95
(14)

Gains on strategic investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,170

$427

$345
133
74
(10)

$542

Fiscal Year Ended January 31,

2021

2020

2019

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 gain, measured as the sale price less the initial purchase price, for equity securities exited during fiscal 2021
and fiscal 2020 was $0.9 billion and $0.4 billion, respectively. Cumulative net realized gains in fiscal 2021
includes gains related to the Company’s sales of its publicly traded investments resulting in a realized gain of
$0.3 billion, and a cumulative net gain of $0.6 billion.

Net unrealized gains recognized in fiscal 2021 and 2020 for strategic investments still held as of those
respective year ends were $1.8 billion and $0.3 billion, respectively. These include approximately $125 million
and $77 million of impairments on privately held equity and debt securities in fiscal 2021 and fiscal 2020,
respectively.

4. 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.

The following table presents information about the Company’s assets and liabilities that are measured at fair

value as of January 31, 2021 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,
2021

Time deposits . . . . . . . . . . . . . . . . . . . .
Money market mutual funds . . . . . . . . .
Cash equivalent securities . . . . . . . . . . . . . .

0
377
0

Marketable securities:
Corporate notes and obligations . . . . . .
U.S. treasury securities . . . . . . . . . . . . .
Mortgage-backed obligations . . . . . . . .
Asset-backed securities . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . .
Covered bonds . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .

0
0
0
0
0
0
0

Strategic investments:

Publicly held equity securities . . . . . . .

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

2,068

$2,445

$1,143
0
1,910

3,341
206
387
1,101
244
328
164

$8,824

0
0
0

0
0
0
0
0
0
0

$ 1,143
377
1,910

3,341
206
387
1,101
244
328
164

2,068

$11,269

(1)

Included in “cash and cash equivalents” in the accompanying consolidated balance sheet in addition to
$2.8 billion of cash, as of January 31, 2021.

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

$ 746
0

Marketable securities:

Corporate notes and obligations . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . .
Mortgage-backed obligations . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . .
Covered bonds . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0
0
0
0
0
0
0

Strategic investments:

Publicly held equity securities . . . . . . . .

370

2,207
183
226
781
158
165
82

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

$1,663

$4,548

0
0

0
0
0
0
0
0
0

$ 746
1,293

2,207
183
226
781
158
165
82

370

$6,211

(1)

Included in “cash and cash equivalents” in the accompanying consolidated balance sheet in addition to
$2.1 billion of cash, as of January 31, 2020.

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 $1.8 billion as of January 31, 2021 and $1.6 billion as of January 31, 2020.

5. Property and Equipment and Other Balance Sheet Accounts

Property and Equipment

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

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . .
Computers, equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of January 31,

2021

2020

293
485
1,901
228
1,507

184
777
1,608
226
1,381

Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . .

4,414
(1,955)

4,176
(1,801)

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,459

$ 2,375

Depreciation and amortization expense totaled $579 million, $455 million and $411 million during fiscal

2021, 2020 and 2019, respectively.

Upon adoption of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) on February 1,
2019, the Company did not use hindsight when determining lease term and therefore included renewal options in
the lease term for the leased property at 350 Mission St. (“350 Mission”) in San Francisco. This lease was
classified as a finance lease and included in property and equipment as of January 31, 2020. In fiscal 2021, the
Company reassessed the lease term for 350 Mission due to management decisions and actions to exit and
sublease the majority of this space through the end of the noncancellable term. As a result of the reassessment of
the lease term, the ROU asset and corresponding lease liability were remeasured to exclude the estimated lease
payments for the renewal option periods and reclassified as operating leases, resulting in the derecognition of
$262 million in buildings and building improvements. After remeasurement and reclassification, the lease
represented $148 million in operating lease ROU assets. The $225 million in remeasured lease liabilities were
also reclassified to operating lease liabilities during the period.

In addition, in fiscal 2021, the Company purchased the property located at 450 Mission St. (“450 Mission”)

in San Francisco, California for approximately $150 million, of which $110 million was allocated to land,
$34 million to building, which is included in property and equipment, net and $6 million to in-place leases,
which is included in intangible assets in the accompanying consolidated balance sheet.

100

Other Balance Sheet Accounts

Accounts payable, accrued expenses and other liabilities as of January 31, 2021 included approximately

$1.7 billion of accrued compensation as compared to $1.5 billion as of January 31, 2020.

6. Leases and Other Commitments

Leases

The Company has operating leases for corporate offices, data centers, and equipment under noncancellable

operating leases with various expiration dates. The leases have noncancellable remaining terms of 1 year to 18
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):

Fiscal Year Ended
January 31,

2021

2020

Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,208

$913

Finance lease cost:

Amortization of right-of-use assets . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .

Total finance lease cost

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

73
15

$ 65
20

$ 85

Prior to the adoption of Topic 842 on February 1, 2019, the Company recognized operating lease costs on a

straight-line basis once control of the space was achieved. Rent expense was $365 million for fiscal 2019.

Supplemental cash flow information related to operating and finance leases was as follows (in millions):

Fiscal Year Ended
January 31,

2021

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

$905
14
48

$827
15
164

Right-of-use assets obtained in exchange for lease obligations:

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

979

509

101

Supplemental balance sheet information related to operating and finance leases was as follows (in millions):

As of January 31,

2021

2020

Operating leases:

Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,204

$3,040

Operating lease liabilities, current . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . .

$ 766
2,842

$ 750
2,445

Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . .

$3,608

$3,195

Finance leases:

Buildings and building improvements (1) . . . . . . . . . . . . . . . . . . . . .
Computers, equipment and software . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0
604
(410)

$ 325
468
(404)

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . .

$ 194

$ 389

. . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities (1)
Other noncurrent liabilities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35
93

53
332

Total finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . .

$ 128

$ 385

(1) As a result of the reassessment of the lease term of 350 Mission, the ROU asset and corresponding lease
liability were remeasured to exclude the estimated lease payments for the renewal option periods and
reclassified as operating leases, resulting in the derecognition of $262 million in buildings and building
improvements. After remeasurement and reclassification, the lease represented $148 million in operating
lease ROU assets. The $225 million in remeasured lease liabilities were also reclassified to operating lease
liabilities during the period.

Other information related to leases was as follows:

As of January 31,

2021

2020

Weighted average remaining lease term

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 years
4 years

7 years
18 years

Weighted average discount rate

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2%
1.9%

2.7%
4.5%

As of January 31, 2021, the maturities of lease liabilities under noncancellable operating and finance leases

were as follows (in millions):

Operating Leases

Finance Leases

Fiscal Period:

Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total minimum lease payments . . . . . . . . . . . . . . . . . . . . .
Less: Imputed interest . . . . . . . . . . . . . . . . . . . . . . . . .

$ 822
680
508
399
336
1,161

3,906
(298)

Total

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

$3,608

$ 37
35
35
26
0
0

133
(5)

$128

102

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 $166 million in the next five years and $34 million thereafter.

As of January 31, 2021, the Company had additional leases that had not yet commenced totaling $1.5 billion

and therefore not reflected on the consolidated balance sheet and tables above. These leases include agreements
for office facilities to be constructed. These leases will commence between fiscal year 2022 and fiscal year 2025
with lease terms of 3 to 18 years.

Of the total lease commitment balance, including leases not yet commenced, of $5.4 billion, approximately

$4.9 billion is related to facilities space. The remaining commitment amount is primarily related to equipment.

Letters of Credit

As of January 31, 2021, the Company had a total of $100 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.

7. Business Combinations

Fiscal Year 2021

Vlocity

In June 2020, the Company acquired all outstanding stock of Vlocity, Inc. (“Vlocity”), a leading provider of

industry-specific cloud and mobile software. The Company has included the financial results of Vlocity in the
consolidated financial statements from the date of acquisition, which were not material to date. The transaction
costs associated with its acquisition were immaterial. The acquisition date fair value of the consideration
transferred for Vlocity was approximately $1.4 billion, which consisted of the following (in millions):

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of stock options and restricted stock awards

assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of pre-existing relationship . . . . . . . . . . . . . . . . . . . . . .

Fair Value

$1,166

6
208

Total

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

$1,380

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 0.05817 was applied to convert Vlocity’s outstanding equity
awards for Vlocity’s common stock into equity awards for shares of the Company’s common stock.

103

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

12
22
1,024
473
15

(35)
(64)
(67)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,380

The excess of purchase consideration over the fair value of net tangible and 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 and
intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions and may
be subject to change as additional information is received. The primary areas that remain preliminary relate to the
fair values of intangible assets acquired, certain tangible assets and liabilities acquired, legal and other
contingencies as of the acquisition date, income and non-income-based taxes and residual goodwill. 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 . . . . . . . . . . . . . . .

$174
299

4 years
8 years

Fair Value

Useful Life

Total intangible assets subject to

amortization . . . . . . . . . . . . . . . . . . . . . . . . . .

$473

Developed technology represents the fair value of Vlocity’s industry-specific cloud and mobile software.

Customer relationships represent the fair values of the underlying relationships with Vlocity customers.

The Company assumed unvested options with a fair value of $139 million. Of the total consideration,
$6 million was allocated to the purchase consideration and $133 million was allocated to future services and will
be expensed over the remaining service periods on a straight-line basis.

The Company had a noncontrolling equity investment in Vlocity valued at $167 million prior to the
acquisition. The Company recognized a gain of approximately $41 million as a result of remeasuring its prior
equity interest in Vlocity held before the business combination. The gain is included in gains on strategic
investments, net in the consolidated statement of operations.

Evergage

In February 2020, the Company acquired all outstanding stock of Evergage Inc. (“Evergage”), for

consideration consisting of cash and equity awards assumed. Evergage is a cloud-based real-time personalization
and customer data platform. The acquisition date fair value of the consideration transferred for Evergage was

104

approximately $100 million, which consisted of cash and the fair value of stock options and restricted stock
awards assumed. The Company recorded approximately $25 million for developed technology and customer
relationships with estimated useful lives of three to five years. The Company recorded approximately $74 million
of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities from
integrating Evergage’s technology with the Company’s other offerings. For the goodwill balance 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.

The Company has included the financial results of Evergage in the consolidated financial statements from
the date of acquisition, which were not material. The transaction costs associated with the acquisition were not
material.

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

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.

105

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

106

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
outstanding equity awards for ClickSoftware’s common stock into equity awards for shares of the Company’s
common stock.

The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of

acquisition (in millions):

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 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.

107

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 non-profit social enterprise that resold the Company’s service

offerings to non-profit and higher education organizations, was combined with the Company. 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 15 “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

108

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 and noncurrent . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes and income taxes payable . . . . .

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.

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 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 acquisition date fair value of the consideration transferred for Datorama was approximately

$766 million, which consisted of $136 million of cash, $537 million of common stock issued and $93 million of
fair value of stock options and restricted stock awards assumed. The Company recorded approximately
$202 million for developed technology and customer relationships with estimated useful lives of one to eight
years. The Company recorded approximately $586 million of goodwill which is primarily attributed to the
assembled workforce and expanded market opportunities from integrating Datorama’s technology with the
Company’s other offerings. The goodwill balance is not deductible for U.S. income taxes purposes.

109

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 acquisition date fair value of the consideration transferred for MuleSoft was approximately $6.4 billion,

which consisted of $4.9 billion of cash, $1.2 billion of common stock issued and $387 million of fair value of
stock options and restricted stock awards assumed. The Company recorded approximately $1.3 billion for
acquired intangible assets, which primarily consisted of $1.0 billion for customer relationships and $224 million
for developed technology, with an estimated useful life ranging from one to eight years. 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 Company recorded approximately $4.8 billion of
goodwill which 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.

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 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.

Pending Acquisition

Slack Technologies, Inc.

In December 2020, the Company entered into a definitive agreement to acquire Slack Technologies, Inc.
(“Slack”), a leading channel-based messaging platform. Under the terms of the agreement, Slack shareholders
will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each outstanding Slack share of
common stock, resulting in an estimated $15.6 billion of cash consideration and 45 million shares of Salesforce
common stock to be issued, based on Slack Class A and Class B shares outstanding as of January 31, 2021. The
agreement also provides for the Company’s assumption of outstanding equity awards held by Slack employees.
The Company expects to fund the cash portion of the consideration with a combination of new debt and cash on
the Company’s balance sheet. See Note 9 “Debt” for further information related to new debt.

The acquisition is anticipated to close in the second quarter of fiscal year 2022, subject to customary closing

conditions, including receipt of Slack stockholder approval and the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act and receipt of other approvals, consents or clearances under
specified antitrust and foreign investment laws.

110

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

Intangible Assets, Net

Weighted
Average
Remaining
Useful Life
(Years)

January 31,
2020

Additions and
retirements,
net (1)

January 31,
2021

January 31,
2020

Expense and
retirements,
net (1)

January 31,
2021

January 31,
2020

January 31,
2021

Acquired developed

technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . .
Other (2) . . . . . . . . . . . . . . . . . . .

$3,598
3,252
72

Total

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

$6,922

$(293)
258
(27)

$ (62)

$3,305
3,510
45

$(1,249)
(888)
(61)

$6,860

$(2,198)

$(178)
(391)
21

$(548)

$(1,427)
(1,279)
(40)

$2,349
2,364
11

$(2,746)

$4,724

$1,878
2,231
5

$4,114

3.2
6.8
3.3

5.1

(1) The Company retired $576 million of fully depreciated intangible assets during fiscal 2021, of which $485 million were included in

acquired developed technology, $57 million in customer relationships and $34 million in other.
Included in other are in-place leases, trade names, trademarks and territory rights.

(2)

Amortization of intangible assets resulting from business combinations for fiscal 2021, 2020 and 2019 was

$1.1 billion, $792 million and $447 million, respectively.

The expected future amortization expense for intangible assets as of January 31, 2021 is as follows (in

millions):

Fiscal Period:
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,078
923
835
568
342
368

Total amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,114

Customer contract assets acquired through business combinations

Customer contract assets resulting from business combinations reflect 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 were $42 million and $93 million as of January 31, 2021 and January 31, 2020,
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 are rather tested for impairment at least annually during
the fourth quarter.

111

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, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tableau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ClickSoftware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salesforce.org . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MapAnything . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other acquisitions and adjustments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Evergage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vlocity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other acquisitions and adjustments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$12,851
10,806
1,132
164
152
29

25,134
74
1,024
86

Balance as of January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 26,318

(1) Adjustments include measurement period adjustments for business combinations from the prior year and 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 2021

January 31, 2021 January 31, 2020

2023 Senior Notes . . . . . . . . . . . . . April 2018 April 2023
2028 Senior Notes . . . . . . . . . . . . . April 2018 April 2028
Loan assumed on 50 Fremont . . . . February 2015 June 2023

3.26%
3.70%
3.75%

Total carrying value of debt
Less current portion of debt

. . . . .
. . . . .

Total noncurrent debt

. . . . . . . . . .

996
1,491
190

2,677
(4)

995
1,489
193

2,677
(4)

$2,673

The Company was in compliance with all debt covenants as of January 31, 2021.

The total estimated fair value of the Company’s 2023 and 2028 Senior Notes as of January 31, 2021 and
January 31, 2020 were $2.8 billion and $2.7 billion, respectively. These fair values were determined based on the
closing trading price per $100 of the 2023 and 2028 Senior Notes as of the last day of trading of fiscal 2021 and
last day of fiscal 2020, respectively, and are deemed Level 2 liabilities within the fair value measurement
framework.

The expected future principal payments for all borrowings as of January 31, 2021 is as follows (in millions):

Fiscal period:
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total principal outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4
4
1,182
1,500

$2,690

112

Revolving Credit Facility

In December 2020, the Company entered into a Credit Agreement with Citibank, N.A., as administrative

agent, and certain other institutional lenders (the “Revolving Loan Credit Agreement”) that provides for a
$3.0 billion unsecured revolving credit facility (“Credit Facility”) that matures in December 2025. The Credit
Facility replaced our previous $1.0 billion revolving credit facility. The Company may use the proceeds of future
borrowings under the Credit Facility for general corporate purposes which may include, without limitation,
financing the consideration for and fees, costs and expenses related to any acquisition.

There were no outstanding borrowings under the Credit Facility as of January 31, 2021. 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), which is

included within other expense in the Company’s consolidated statement of operations:

Fiscal Year Ended
January 31,

2021

2020

2019

Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96 $106 $106
16
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14
0

4
0

$110

$ 110

$ 126

Slack-Related Financing

In December 2020, in connection with the Company’s entry into the definitive agreement to acquire Slack,

the Company obtained commitments from certain financial institutions for a $10.0 billion 364-day senior
unsecured bridge loan facility (the “Bridge Facility”), subject to customary conditions, which were subsequently
reduced to $7.0 billion in December 2020 following the Company’s entry into the term loan agreement referred
to below. In February 2021, the Company elected to further reduce its Bridge Facility commitments to
$4.0 billion. The Company may further reduce the commitments in respect of the Bridge Facility prior to the
consummation of the acquisition, all or a portion of which reduction may be in connection with the issuance of
one or more series of senior secured debt securities and/or other incurrences of indebtedness or commitments in
respect thereof.

In December 2020, the Company also entered into a $3.0 billion three-year senior unsecured term loan

agreement (“Acquisition Term Loan”) the proceeds of which may be used to finance a portion of the cash
consideration for the pending acquisition of Slack, for the repayment of certain debt of Slack and to pay fees,
costs and expenses related thereto. The availability and funding of the Bridge Facility and the Acquisition Term
Loan are conditioned on the consummation of the acquisition of Slack in accordance with the terms of the merger
agreement and is subject to certain exceptions, qualifications and certain other conditions.

For more information regarding the acquisition of Slack, see Note 7 “Business Combinations.”

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”).

113

As of January 31, 2021 and January 31, 2020, $140 million and $107 million, respectively, was withheld on

behalf of employees for future purchases under the ESPP and recorded as accrued compensation. Shares
purchased under the ESPP were approximately 3.9 million, 3.3 million and 3.5 million during fiscal 2021, fiscal
2020 and fiscal 2019, respectively.

Options issued have terms 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,

2021

2020

2019

28-37%

27-30%

27-28%

3.5 years

0.2-1.4%

1.6-2.5%

2.5-3.0%

grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.24

39.59

28.89

ESPP

Fiscal Year Ended January 31,

2021

2020

2019

42-48%

28-33%

23-26%

0.75 years

0.1-0.2%

1.6-2.1%

2.0-2.6%

grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64.14

41.43

32.90

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 2021, 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.

114

Stock option activity, excluding the ESPP for fiscal 2021 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, 2020 . . . . . . . . .

Increase in shares authorized:

2013 Equity Incentive 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, 2021 . . . . . . . . .

Vested or expected to vest

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

Exercisable as of January 31, 2021 . . . . . . .

31
1
(8)
(19)

(2)

$ 98.56

147.80

(10)
(2)

79.12
136.34

$120.61

$118.53

$ 87.40

$2,455

$2,341

$1,440

The total intrinsic value of the options exercised during fiscal 2021, 2020, and 2019, was $1.2 billion,
$799 million, and $784 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 4.5

years.

As of January 31, 2021, options to purchase 10 million shares were vested at a weighted-average exercise
price of $87.40 per share and had a weighted-average remaining 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, 2021
was approximately $1.4 billion.

The following table summarizes information about stock options outstanding as of January 31, 2021:

Range of Exercise
Prices

$0.36 to $59.34 . . . . . . . . . . . .
$59.64 to $118.04 . . . . . . . . . .
$122.03 to $148.95 . . . . . . . . .
$154.14 . . . . . . . . . . . . . . . . . .
$155.20 to $161.50 . . . . . . . . .
$162.81 to $258.04 . . . . . . . . .

Options Outstanding

Options Exercisable

Number
Outstanding
(in millions)

Weighted-Average
Remaining
Contractual Life
(Years)

Weighted-Average
Exercise Price

Number of
Shares
(in millions)

Weighted-Average
Exercise Price

$ 41.41
97.24
142.49
154.14
161.50
202.46

$120.61

4
4
1
0
1
0

$ 42.90
92.64
137.73
0.00
161.50
0.00

$ 87.40

4
6
2
6
4
1

3.0
3.4
5.3
6.2
5.0
6.1

4.6

115

Restricted stock activity for fiscal 2021 is as follows:

Restricted Stock Outstanding

Outstanding
(in millions)

Balance as of January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted - restricted stock units and awards . . . . . . . . . . . . . . . . . . . . . . . .
Granted - performance-based stock units . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested and converted to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected to vest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28
11
1
(2)
(13)

Aggregate
Intrinsic
Value (in
millions)

Weighted-
Average
Grant
Date Fair
Value

$140.14
165.52
154.14
144.54
132.43

$155.50

$5,727

$5,058

The restricted stock, which upon vesting entitles the holder to one share of common stock for each share of

restricted stock, has an exercise price of $0.001 per share, which is equal to the par value of the Company’s
common stock, and generally vests over four years. The total fair value of shares vested during fiscal 2021 and
2020 was $2.5 billion and $1.9 billion, respectively.

The aggregate expected stock compensation remaining to be recognized as of January 31, 2021 is as follows

(in millions):

Fiscal Period:
Fiscal 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,923
1,273
725
157

$4,078

The aggregate expected stock compensation remaining to be recognized reflects only outstanding stock

awards as of January 31, 2021 and assumes no forfeiture activity. The aggregate expected stock compensation
remaining will be recognized over a weighted-average period of two years.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at

January 31, 2021 (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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amended and Restated 2004 Employee Stock Purchase

Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80
2

7
137

116

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, 2021 and
2020, 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,

2021

$2,683
(122)

$ 2,561

2020

$686
20

$ 706

2019

$839
144

$ 983

The provision for (benefit from) income taxes consisted of the following (in millions):

Fiscal Year Ended January 31,

2021

2020

2019

Current:

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(12)
53
238

279

8
33
512

553

Deferred:

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

228
66
(2,084)

(1,790)

(41)
8
60

0
39
117

156

(248)
(37)
2

(283)

Provision for (benefit from) income taxes . . . . . . . . .

$(1,511)

$580

$(127)

In fiscal 2021, the Company changed its international corporate structure, which included the transfer of

certain intangible property to Ireland resulting in a net tax benefit of $2.0 billion related to foreign deferred tax
assets. The deferred tax assets were recognized as a result of the book and tax basis difference on the intangible
property transferred to an Irish subsidiary and were based on the intangible property’s current fair value. The
determination of the estimated fair value of the intangible property is complex and judgmental due to the use of
subjective assumptions in the valuation models used by management. The tax amortization related to the
intellectual property transferred will be recognized in future periods and any amortization that is unused in a
particular year can be carried forward indefinitely under Irish tax laws. The deferred tax asset and the tax benefit
were measured based on the currently enacted Irish tax rate. The Company believes that it is more likely than not
that the deferred tax assets will be realized in Ireland. 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

117

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.

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):

Fiscal Year Ended January 31,

2021

2020

2019

U.S. federal taxes at statutory rate . . . . . . . . . . . . . . . . . . .
State, net of the federal benefit
. . . . . . . . . . . . . . . . . . . . .
Effects of non-U.S. operations (1) . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits related to share-based

compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of U.S. tax law change . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net

538
90
(1,817)
(125)
45

(289)
23
15
9

$ 148
40
540
(195)
119

(166)
6
85
3

$ 206
79
379
(132)
63

(137)
43
(612)
(16)

Provision for (benefit from) income taxes . . . . . . . . . . . . .

$(1,511)

$ 580

$(127)

(1) Fiscal 2021 effects of non-U.S. operations included tax benefit from the transfer of certain intangible

property in Ireland. Fiscal 2020 included incremental tax costs associated with the integration of acquired
operations and assets.

118

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.

Significant components of the Company’s deferred tax assets and liabilities were as follows (in millions):

Deferred tax assets:

Losses and deductions carryforward . . . . . . . . . . . . . . .
Deferred stock-based expense . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax assets, net of valuation allowance . . . . . . . . . . .
Deferred tax liabilities:

Capitalized costs to obtain revenue contracts . . . . . . . . .
Purchased intangible assets . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . .
Basis difference on strategic and other investments . . . .
Lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . .

As of January 31,

2021

2020

202
179
990
269
2,011
948
71
17

4,687
(305)

4,382

(581)
(833)
(121)
(400)
(863)

218
193
913
214
0
769
4
31

2,342
(290)

2,052

(449)
(915)
(76)
(69)
(695)

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,798)

(2,204)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . .

$ 1,584

$ (152)

At January 31, 2021, for federal income tax purposes, the Company had net operating loss carryforwards of
approximately $1.9 billion, which expire in fiscal 2022 through 2038 with the exception of post-2017 losses that
do not expire, federal research and development tax credits of approximately $778 million, which expire in fiscal
2022 through fiscal 2041, foreign tax credits of approximately $178 million, which expire in fiscal 2022 through
fiscal 2030. For California income tax purposes, the Company had net operating loss carryforwards of
approximately $725 million which expire beginning in fiscal 2022 through fiscal 2040, California research and
development tax credits of approximately $437 million, which do not expire. For other states’ income tax
purposes, the Company had net operating loss carryforwards of approximately $871 million, which expire
beginning in fiscal 2022 through fiscal 2041 and tax credits of approximately $72 million, which expire
beginning in fiscal 2022 through fiscal 2041. 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 $305 million and $290 million as of January 31, 2021 and

January 31, 2020 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, 2021 was primarily related to U.S.

119

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.

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.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits for fiscal years

2021, 2020 and 2019 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,

2021

2020

$ 1,433

852

2019

$ 304

77
(40)

107
(87)
(19)
8

12
(37)

640
(27)
(4)
(3)

474
(2)

107
(15)
(10)
(6)

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,479

$1,433

$852

In fiscal 2021, the Company reported a net increase of approximately $46 million in its unrecognized tax
benefits. In fiscal 2020, the Company reported an increase of approximately $581 million in its unrecognized tax
benefits primarily for the incremental tax costs associated with the integration of certain acquired operations and
assets. For fiscal 2021, 2020 and 2019, total unrecognized tax benefits in an amount of $1.3 billion, $1.2 billion
and $631 million respectively, if recognized, would have reduced income tax expense and the Company’s
effective tax rate.

The Company has recognized interest and penalties related to unrecognized tax benefits in the income tax

provision of $25 million, $2 million and $4 million in fiscal 2021, 2020 and 2019, respectively. Interest and
penalties accrued as of January 31, 2021, 2020 and 2019 were $37 million, $12 million and $10 million,
respectively.

Certain prior year tax returns are currently being examined by various taxing authorities in countries
including the United States, France, Germany, and Japan. 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,

120

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 2017 in jurisdictions
outside of U.S. are generally closed. However, in Japan, the Company is no longer subject to examinations for
years prior to fiscal 2015.

The Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to
approximately $3 million may occur in the next 12 months, as the applicable statutes of limitations lapse.

12. Net Income 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 and restricted stock units. 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,

2021

2020

2019

Numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,072

$126

$1,110

Denominator:
Weighted-average shares outstanding for basic earnings per

share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

908

829

751

Effect of dilutive securities:

Employee stock awards . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible senior notes which matured in April

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants which settled in June and July 2018 . . . . . . . . .

0
0

1
2

Adjusted weighted-average shares outstanding and assumed

conversions for diluted earnings per share . . . . . . . . . . . . . .

930

850

775

The weighted-average number of shares outstanding used in the computation of diluted earnings per share

does not include the effect of the following potentially 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,

2021

2020

2019

13. 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 2021, 2020 and 2019, were
$163 million, $127 million and $106 million, respectively.

14. 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

121

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.

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. At this time, 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, including all those described below, 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 materially affect the Company’s current or future results of operations or
cash flows, or both, in a particular quarter.

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, among
other things, 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 more 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 class certification. The parties have completed fact and expert discovery. On October 1, 2020, the Court
entered an order staying the deadline for summary judgment motions to allow the parties to complete additional
discovery. The court has not yet set a trial date. On March 10, 2021, the parties reached an agreement in principle
to settle the litigation in its entirety. The parties are negotiating an agreement reflecting the specific terms of
settlement.

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. In April 2020, the same purported stockholder who filed the 2018 derivative action, who had

122

previously been a shareholder of Tableau and acquired shares of Salesforce as a result of the acquisition of
Tableau by Salesforce in August 2019, filed a “double derivative” action in the United States District Court for
the District of Delaware, allegedly on behalf of and for the benefit of Salesforce and Tableau, against certain of
Tableau’s now former directors and officers. The double derivative complaint adds Salesforce as an additional
nominal defendant, but otherwise names the same individual defendants, generally alleges the same purported
wrongdoing, and seeks the same relief as the 2018 derivative action. On April 24, 2020, the court consolidated
the 2018 and 2020 derivative actions. On June 5, 2020, the parties stipulated, and on June 12, 2020, the court
entered an order, vacating the defendants’ deadline to respond to the April 2020 complaint and requiring the
plaintiff to file an amended complaint on or before August 11, 2020. On August 11, 2020, the plaintiff filed his
amended complaint. The Company filed a motion to dismiss the amended complaint on September 25, 2020. On
February 10, 2021, the Court dismissed plaintiff’s amended complaint with leave to amend. Plaintiff’s deadline
to file a second amended complaint passed on March 12, 2021, without any amended filings by Plaintiff.

15. Related-Party Transactions

In January 1999, the Salesforce Foundation (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. The Company’s Chair is the chair of the Foundation
and holds one of the three Foundation board seats. The Company does not control the Foundation’s activities,
and accordingly, the Company does not consolidate the Foundation’s statement of activities with its financial
results. Since the Foundation’s inception, the Company has provided at no charge certain resources to the
Foundation including general administrative support and has agreed to use its best efforts to make charitable cash
commitments through the third quarter of fiscal 2030. The value of these resources and charitable cash
contributions to the Foundation has not been and is not expected to be material.

16. Subsequent Event

In February 2021, the Company acquired all outstanding stock of Acumen Solutions, Inc. (“Acumen”), a

professional services firm that provides innovative and critical solutions to clients using the Company’s service
offerings and other advanced cloud technologies. The total consideration for Acumen was approximately
$433 million, in cash.

123

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.

As a result of COVID-19, our employees globally shifted to working from home beginning in March 2020.
While pre-existing controls were not specifically designed to operate in our current work-from-home operating
environment, we believe that our disclosure controls and procedures can be executed effectively and continue to
be effective.

(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,
2021 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.

As a result of COVID-19, and as described above, we took precautionary actions to re-evaluate and refine

our financial reporting process to provide reasonable assurance that we could report our financial results
accurately and timely.

Based on the results of our evaluation, our management concluded that our internal control over financial
reporting was effective as of January 31, 2021. We reviewed the results of management’s assessment with our
Audit Committee.

124

The effectiveness of our internal control over financial reporting as of January 31, 2021 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.

There was no change in our internal control over financial reporting that occurred during the quarter ended

January 31, 2021 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.

125

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, Amy Weaver, 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.”

126

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 “Financial Statements.”

2. Financial Statement Schedules: The Financial Statement Schedules have been omitted because they

are not applicable or are not required or are not present in material amounts 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.

ITEM 16. 10-K SUMMARY

Omitted at registrant’s option.

127

Exhibit
No.

2.1

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*

10.9*

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
December 1, 2020, by and among
salesforce.com, inc., Skyline Strategies I Inc.,
Skyline Strategies II LLC and Slack
Technologies, 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

salesforce.com, inc. Amended and Restated
2013 Equity Incentive Plan

salesforce.com, inc. Amended and Restated
2004 Employee Stock Purchase Plan

Form of Indemnification Agreement between
salesforce.com, inc. and its officers and
directors

8-K

001-32224

2.1

12/1/2020

8-K

001-32224

3.1

6/7/2019

8-K

001-32224

S-1/A 333-111289

3.1

4.2

3/12/2021

4/20/2004

8-K

001-32224

4.1

4/11/2018

8-K

S-8

001-32224

4.2

4.3

4.4

4/11/2018

333-
20958349

4.3

6/12/2020

4.4

6/12/2020

S-1/A 333-111289

10.1

4/20/2004

MetaMind, Inc. 2014 Stock Incentive Plan

S-8

333-211510

4.1

5/20/2016

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

Gratitude Bonus Plan, as amended and
restated August 21, 2019, effective August 21,
2019

128

S-8

333-213685

4.3

6/7/2019

10-Q

001-32224

10.4

8/23/2019

Exhibit
No.

10.10*

10.11*

Exhibit Description

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, Mark Hawkins and Joe
Allanson

10.12*

Form of Change of Control and Retention
Agreement entered into with non-CEO
Executive Officers after 2014

10.13*

Salesforce Tableau Equity Incentive Plan

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

10-K

001-32224

10.13

3/9/2009

10-K

001-32224

10.14

3/9/2009

10-K

001-32224

10.16

3/5/2020

S-8
POS 333-232530

4.4

8/1/2019

10.14*

Founder Restricted Stock Agreement

10-K

001-32224

10.18

3/5/2020

10.15*

10.16*

10.17*

10.18*

10.19

10.20

10.21

10.22

10.23

Transition Agreement, dated February 24,
2020, between salesforce.com, inc. and Keith
Block

Transition Agreement, dated November 30,
2020, between salesforce.com, inc. and Mark
Hawkins

Aircraft Time Sharing Agreement, dated
March 17, 2020, between salesforce.com, inc.
and Marc Benioff

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

Voting and Support Agreement, dated as of
December 1, 2020, by and among
salesforce.com, inc. and each of the persons
set forth on the signature pages thereto.

Credit Agreement, dated as of December 23,
2020, by and among the Company, the lenders
and other parties party thereto, and Citibank,
N.A., as Administrative Agent, Swingline
Lender and an Issuing Lender.

Credit Agreement, dated as of December 23,
2020, by and among the Company, the lenders
and other parties party thereto, and Bank of
America, N.A., as Administrative Agent.

129

10-Q

001-32224

10.2

6/1/2020

10-K

001-32224

10.19

3/5/2020

10-Q

001-32224

10.2

5/30/2014

10-Q

001-32224

10.2 11/26/2014

8-K

001-32224

10.1

12/1/2020

8-K

001-32224

10.1 12/23/2020

8-K

001-32224

10.2 12/23/2020

Provided
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

Exhibit
No.

21.1

23.1

24.1

31.1

31.2

32.1

Exhibit Description

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
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 Inline XBRL Taxonomy Extension Schema

Document

101.CAL Inline XBRL Taxonomy Extension

Calculation Linkbase Document

101.DEF Inline XBRL Extension Definition

101.LAB Inline XBRL Taxonomy Extension Label

Linkbase Document

101.PRE Inline XBRL Taxonomy Extension

Presentation Linkbase Document

104

The Cover Page Interactive Data File,
formatted in Inline XBRL (included in Exhibit
101).

* Indicates a management contract or compensatory plan or arrangement.

130

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 17, 2021

salesforce.com, inc.

By:

/S/ AMY WEAVER
Amy Weaver
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)

131

POWER OF ATTORNEY AND SIGNATURES

KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below

constitutes and appoints Marc Benioff, Amy Weaver and Joe Allanson, 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/ Amy Weaver
Amy Weaver

/s/

Joe Allanson

/s/ Craig Conway
Craig Conway

/s/

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

/s/ Robin L. Washington
Robin L. Washington

/s/ Maynard Webb
Maynard Webb

/s/ Susan Wojcicki
Susan Wojcicki

Chair of the Board and Chief

Executive Officer (Principal
Executive Officer)

President and Chief Financial
Officer (Principal Financial
Officer)

March 17, 2021

Executive Vice President, Chief

March 17, 2021

Accounting Officer and
Corporate Controller (Principal
Accounting Officer)

Director

March 17, 2021

Director, Co-Founder

March 17, 2021

Director

132

March 17, 2021

[THIS PAGE INTENTIONALLY LEFT BLANK]

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Board of Directors

Marc Benioff
Craig Conway
Parker Harris(cid:3)
Alan Hassenfeld
Neelie Kroes
Colin Powell

Chair of the Board of Directors & Chief Executive Officer

Former Chief Executive Officer, PeopleSoft, Inc.; Director, Nutanix

(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)

Director, Hasbro, Inc.

Former Vice President of the European Commission

General, Former U.S. Secretary of State, Former Chairman, Joint Chiefs of Staff;

Director, Bloom Energy

Sanford Robertson
John V. Roos(cid:3)

Principal, Francisco Partners; Director, Cassava Sciences

(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)

Director, Rakuten

Robin Washington

Former Executive Vice President & Chief Financial Officer, Gilead Sciences, Inc.;

Maynard Webb(cid:3)
Susan Wojcicki

Director, Alphabet, Inc., Honeywell International, Inc., Vertiv Holdings Co.

(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
Parker Harris(cid:3)
Brent Hyder
Gavin Patterson
Srinivas Tallapragada
Bret Taylor
Amy Weaver

Chair of the Board of Directors & Chief Executive Officer

Chief Accounting Officer & Corporate Controller

President & Chief People Officer

President & Chief Revenue Officer

President & Chief Engineering Officer

President & Chief Operating Officer

President & Chief Financial Officer

Investor Relations

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Stock Listing

Salesforce trades on the New York Stock Exchange
under the ticker symbol “CRM.”

Note on Forward-Looking Statements
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differ materially from those expressed in such statements. Further information on factors that could affect results is included in
(cid:227)(cid:168)(cid:152)(cid:3)(cid:162)(cid:171)(cid:220)(cid:142)(cid:130)(cid:188)(cid:3)(cid:272)(cid:270)(cid:272)(cid:271)(cid:3)(cid:36)(cid:202)(cid:216)(cid:194)(cid:3)(cid:271)(cid:270)(cid:384)(cid:58)(cid:359)(cid:3)(cid:171)(cid:195)(cid:142)(cid:188)(cid:232)(cid:148)(cid:152)(cid:148)(cid:3)(cid:171)(cid:195)(cid:3)(cid:227)(cid:168)(cid:171)(cid:220)(cid:3)(cid:130)(cid:195)(cid:195)(cid:232)(cid:130)(cid:188)(cid:3)(cid:216)(cid:152)(cid:213)(cid:202)(cid:216)(cid:227)(cid:364)

World Wide 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

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