10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 31, 2015

OR

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

Commission File Number: 001-32224

salesforce.com, inc.

(Exact name of registrant as specified in its charter)

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

The Landmark @ One Market, Suite 300

San Francisco, California 94105

(Address of principal executive offices)

Telephone Number (415) 901-7000

(Registrant’s telephone number, including area code)

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

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

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

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

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

As of October 31, 2015, there were approximately 664.0 million shares of the Registrant’s Common Stock outstanding.

INDEX

		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of October 31, 2015 and January 31, 2015	3
	Condensed Consolidated Statements of Operations for the three and nine months ended October 31, 2015 and 2014	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows for the three and nine months ended October 31, 2015 and 2014	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	67
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	83

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

	October 31, 2015			January 31, 2015
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,223,318		$	908,117
Short-term marketable securities	134,687			87,312
Accounts receivable, net	1,060,726			1,905,506
Deferred commissions	208,133			225,386
Prepaid expenses and other current assets	311,909			280,554
Land and building improvements held for sale	0			143,197
Total current assets	2,938,773			3,550,072
Marketable securities, noncurrent	943,301			894,855
Property and equipment, net	1,742,142			1,125,866
Deferred commissions, noncurrent	148,147			162,796
Capitalized software, net	397,013			433,398
Goodwill	3,849,054			3,782,660
Strategic investments	496,809			175,774
Other assets, net	396,727			452,546
Restricted cash	0			115,015
Total assets	$	10,911,966		$	10,692,982
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	1,149,693		$	1,103,335
Deferred revenue	2,827,285			3,286,768
Total current liabilities	3,976,978			4,390,103
Convertible 0.25% senior notes, net	1,088,910			1,070,692
Loan assumed on 50 Fremont	198,851			0
Revolving credit facility	0			300,000
Deferred revenue, noncurrent	19,225			34,681
Other noncurrent liabilities	878,048			922,323
Total liabilities	6,162,012			6,717,799
Stockholders’ equity:
Common stock	664			651
Additional paid-in capital	5,410,377			4,604,485
Accumulated other comprehensive loss	(33,325		)	(24,108		)
Accumulated deficit	(627,762		)	(605,845		)
Total stockholders’ equity	4,749,954			3,975,183
Total liabilities and stockholders’ equity	$	10,911,966		$	10,692,982

See accompanying Notes.

3

salesforce.com, inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Revenues:
Subscription and support	$	1,596,333		$	1,288,513		$	4,522,939		$	3,668,406
Professional services and other	115,634			95,142			334,879			260,572
Total revenues	1,711,967			1,383,655			4,857,818			3,928,978
Cost of revenues (1)(2):
Subscription and support	303,045			238,746			870,023			666,611
Professional services and other	120,638			94,465			340,846			266,736
Total cost of revenues	423,683			333,211			1,210,869			933,347
Gross profit	1,288,284			1,050,444			3,646,949			2,995,631
Operating expenses (1)(2):
Research and development	239,212			195,460			695,440			586,927
Marketing and sales	818,820			709,643			2,349,449			2,020,956
General and administrative	186,818			167,383			544,314			498,565
Operating lease termination resulting from purchase of 50 Fremont, net	0			0			(36,617		)	0
Total operating expenses	1,244,850			1,072,486			3,552,586			3,106,448
Income (loss) from operations	43,434			(22,042		)	94,363			(110,817		)
Investment income	3,507			2,622			11,351			7,055
Interest expense	(18,249		)	(17,682		)	(53,020		)	(56,355		)
Other expense (1)(3)	(7,093		)	(372		)	(6,064		)	(15,095		)
Gain on sales of land and building improvements	21,792			15,625			21,792			15,625
Income (loss) before provisions for income taxes	43,391			(21,849		)	68,422			(159,587		)
Provisions for income taxes	(68,548		)	(17,075		)	(90,339		)	(37,336		)
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Basic net loss per share	$	(0.04	)	$	(0.06	)	$	(0.03	)	$	(0.32	)
Diluted net loss per share	$	(0.04	)	$	(0.06	)	$	(0.03	)	$	(0.32	)
Shares used in computing basic net loss per share	664,131			629,548			659,160			619,748
Shares used in computing diluted net loss per share	664,131			629,548			659,160			619,748

_______________

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	$	20,296	$	20,351	$	60,825	$	70,294
Marketing and sales	18,966		15,095		57,995		44,708
Other non-operating expense	761		0		2,877		0

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	$	17,516	$	14,118	$	49,237	$	38,905
Research and development	31,534		26,868		96,508		87,264
Marketing and sales	69,561		72,892		211,819		210,510
General and administrative	25,706		25,582		77,092		76,284

(3) Amount includes approximately $10.2 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the nine months ended October 31, 2014.

See accompanying Notes.

4

salesforce.com, inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Other comprehensive loss, before tax and net of reclassification adjustments:
Foreign currency translation and other losses	(1,173		)	(13,692		)	(8,419		)	(15,876		)
Unrealized gains (loss) on investments	(2,873		)	1,278			337			(3,055		)
Other comprehensive loss, before tax	(4,046		)	(12,414		)	(8,082		)	(18,931		)
Tax effect	(1,135		)	0			(1,135		)	0
Other comprehensive loss, net of tax	(5,181		)	(12,414		)	(9,217		)	(18,931		)
Comprehensive loss	$	(30,338	)	$	(51,338	)	$	(31,134	)	$	(215,854	)

See accompanying Notes.

5

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Operating activities:
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	134,236			111,954			393,838			330,358
Amortization of debt discount and transaction costs	7,138			9,420			20,290			31,160
Gain on sales of land and building improvements	(21,792		)	(15,625		)	(21,792		)	(15,625		)
50 Fremont lease termination, net	0			0			(36,617		)	0
Loss on conversions of convertible senior notes	0			1,340			0			10,230
Abandonment of leasehold improvement	7,086			0			7,086			0
Amortization of deferred commissions	78,934			65,371			232,768			186,526
Expenses related to employee stock plans	144,317			139,460			434,656			412,963
Excess tax benefits from employee stock plans	(44,607		)	(1,221		)	(48,698		)	(3,447		)
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net	15,262			39,792			853,014			566,306
Deferred commissions	(80,030		)	(64,280		)	(200,867		)	(171,022		)
Prepaid expenses and other current assets and other assets	33,841			6,588			4,495			34,501
Accounts payable, accrued expenses and other liabilities	57,577			(1,933		)	12,276			(44,894		)
Deferred revenue	(188,898		)	(129,431		)	(475,357		)	(298,642		)
Net cash provided by operating activities	117,907			122,511			1,153,175			841,491
Investing activities:
Business combinations, net of cash acquired	(27,759		)	38,071			(58,680		)	38,071
Proceeds from land and building improvements held for sale	127,066			192,240			127,066			223,240
Purchase of 50 Fremont land and building	0			0			(425,376		)	0
Deposit for purchase of 50 Fremont land and building	0			(114,935		)	115,015			(114,935		)
Non-refundable amounts received for sale of land available for sale	0			0			6,284			0
Strategic investments	(30,330		)	(12,852		)	(325,226		)	(47,905		)
Purchases of marketable securities	(200,001		)	(154,560		)	(543,422		)	(690,024		)
Sales of marketable securities	91,153			46,908			414,259			197,293
Maturities of marketable securities	7,166			22,288			23,445			46,248
Capital expenditures	(80,041		)	(73,426		)	(216,011		)	(205,100		)
Net cash used in investing activities	(112,746		)	(56,266		)	(882,646		)	(553,112		)
Financing activities:
Proceeds from revolving credit facility, net	0			297,325			0			297,325
Proceeds from employee stock plans	98,016			91,337			367,830			226,561
Excess tax benefits from employee stock plans	44,607			1,221			48,698			3,447
Payments on convertible senior notes	0			(89,645		)	0			(387,229		)
Principal payments on capital lease obligations	(10,945		)	(10,345		)	(68,844		)	(61,280		)
Payments on revolving credit facility and term loan	0			(270,000		)	(300,000		)	(285,000		)
Net cash provided by (used in) financing activities	131,678			19,893			47,684			(206,176		)
Effect of exchange rate changes	(2,872		)	(14,538		)	(3,012		)	(17,513		)
Net increase in cash and cash equivalents	133,967			71,600			315,201			64,690
Cash and cash equivalents, beginning of period	1,089,351			774,725			908,117			781,635
Cash and cash equivalents, end of period	$	1,223,318		$	846,325		$	1,223,318		$	846,325

See accompanying Notes.

6

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

Supplemental Cash Flow Disclosure

(in thousands)

(unaudited)

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Supplemental cash flow disclosure:
Cash paid during the period for:
Interest	$	4,085	$	4,285	$	32,756	$	21,274
Income taxes, net of tax refunds	$	8,248	$	6,187	$	24,450	$	30,986
Non-cash financing and investing activities:
Fixed assets acquired under capital leases	$	2,065	$	38,604	$	7,191	$	119,939
Building in progress - leased facility acquired under financing obligation	$	38,477	$	29,756	$	75,336	$	62,804
Fair value of loan assumed on 50 Fremont	$	0	$	0	$	198,751	$	0
Fair value of common stock issued as consideration for business combinations	$	0	$	338,033	$	0	$	338,033

See accompanying Notes.

7

salesforce.com, inc.

Notes to Condensed Consolidated Financial Statements

1. Summary of Business and Significant Accounting Policies

Description of Business

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

Fiscal Year

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

Basis of Presentation

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

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

Use of Estimates

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

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

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

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

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

• the fair value of convertible notes,

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

• the useful lives of intangible assets and property and equipment,

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

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

8

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

Principles of Consolidation

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

Segments

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

Concentrations of Credit Risk and Significant Customers

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

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

Geographic Locations

As of October 31, 2015 and January 31, 2015, assets located outside the Americas were nine percent and 12 percent of total assets, respectively.

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Americas	$	1,258,148	$	995,331	$	3,575,441	$	2,812,654
Europe	302,704		252,982		848,413		730,324
Asia Pacific	151,115		135,342		433,964		386,000
	$	1,711,967	$	1,383,655	$	4,857,818	$	3,928,978

Americas revenue attributed to the United States was approximately 95 percent and 94 percent during the three and nine months ended October 31, 2015 and 2014. No other country represented more than ten percent of total revenue during the three and nine months ended October 31, 2015 and 2014.

Revenue Recognition

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

9

The Company commences revenue recognition when all of the following conditions are satisfied:

• there is persuasive evidence of an arrangement;

• the service has been or is being provided to the customer;

• the collection of the fees is reasonably assured; and

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

The Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Subscription and Support Revenues

Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company’s service is made available to customers.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Professional Services and Other Revenues

The majority of the Company’s professional services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

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

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

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

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

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Deferred Revenue

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

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

Deferred Commissions

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

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

Cash and Cash Equivalents

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

Marketable Securities

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

Fair Value Measurement

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

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

Property and Equipment

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

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	The remaining lease term or up to 10 years

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

11

Capitalized Internal-Use Software Costs

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

Goodwill and Intangible Assets Impairment Assessments

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

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

Long- Lived Assets and Impairment Assessment

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

Business Combinations

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

Leases and Asset Retirement Obligations

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

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

In the event the Company is the deemed owner for accounting purposes during construction, the Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

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

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Accounting for Stock-Based Expense

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

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

	Three Months Ended   October 31,						Nine Months Ended   October 31,
Stock Options	2015			2014			2015			2014
Volatility	35		%	37		%	35-37		%	37		%
Estimated life	3.6 years			3.5 years			3.6 years			3.5 years
Risk-free interest rate	1.21-1.27		%	1.34-1.53		%	1.13-1.42		%	1.20-1.53		%
Weighted-average fair value per share of grants	$	19.72		$	17.32		$	19.79		$	16.46

	Three Months Ended   October 31,		Nine Months Ended   October 31,
ESPP	2015	2014	2015			2014
Volatility	n/a	n/a	34		%	34-35		%
Estimated life	n/a	n/a	0.75 years			0.75 years
Risk-free interest rate	n/a	n/a	0.06-0.27		%	0.07-0.16		%
Weighted-average fair value per share of grants	n/a	n/a	$	19.30		$	14.53

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

Income Taxes

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

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

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

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Foreign Currency Translation

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

Warranties and Indemnification

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

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

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

New Accounting Pronouncements

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

In May 2013, FASB issued Accounting Standards Update No. 2013-270, “a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)” (“ASU 2013-270”), to place leases on lessee’s balance sheets. ASU 2013-270 states a lessee would recognize a lease liability for lease payments and recognize an asset for its right to use the leased asset during the lease term. In November 2015, FASB set an effective date for annual periods after December 2018. The Company plans to adopt ASU 2013-270 in fiscal 2020 and is currently evaluating the impact to its condensed consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”) which eliminates the requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2015-16 on its condensed consolidated financial statements.

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Reclassification

Certain reclassifications to the fiscal 2015 balances were made to conform to the current period presentation in the Balance Sheet. These reclassifications include strategic investments and other assets, net.

2. Investments

Marketable Securities

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

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	636,779	$	905	$	(1,678	)	$	636,006
U.S. treasury securities	126,837		149		(42		)	126,944
Mortgage backed obligations	84,288		94		(401		)	83,981
Asset backed securities	176,633		73		(240		)	176,466
Municipal securities	36,358		141		(30		)	36,469
Foreign government obligations	2,094		16		(2		)	2,108
U.S. agency obligations	8,998		5		(9		)	8,994
Covered bonds	6,863		157		0			7,020
Total marketable securities	$	1,078,850	$	1,540	$	(2,402	)	$	1,077,988

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

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

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

	As of
	October 31, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	134,687	$	87,312
Long-term (due after one year)	943,301		894,855
	$	1,077,988	$	982,167

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As of October 31, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	330,654	$	(1,382	)	$	51,475	$	(296	)	$	382,129	$	(1,678	)
U.S. treasury securities	47,184		(42		)	0		0			47,184		(42		)
Mortgage backed obligations	51,412		(298		)	9,143		(103		)	60,555		(401		)
Asset backed securities	122,349		(212		)	7,398		(28		)	129,747		(240		)
Municipal securities	3,990		(18		)	3,949		(12		)	7,939		(30		)
Foreign government obligations	1,576		(2		)	0		0			1,576		(2		)
U.S. agency obligations	4,991		(9		)	0		0			4,991		(9		)
	$	562,156	$	(1,963	)	$	71,965	$	(439	)	$	634,121	$	(2,402	)

The unrealized losses for each of the fixed rate marketable securities were less than $74,000. The Company does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of October 31, 2015. The Company expects to receive the full principal and interest on all of these marketable securities.

Fair Value Measurement

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

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

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

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

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

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

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of October 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	235,695	$	0	$	235,695
Money market mutual funds	339,446		0		0		339,446
Marketable securities:
Corporate notes and obligations	0		636,006		0		636,006
U.S. treasury securities	0		126,944		0		126,944
Mortgage backed obligations	0		83,981		0		83,981
Asset backed securities	0		176,466		0		176,466
Municipal securities	0		36,469		0		36,469
Foreign government obligations	0		2,108		0		2,108
U.S. agency obligations	0		8,994		0		8,994
Covered bonds	0		7,020		0		7,020
Foreign currency derivative contracts (2)	0		7,789		0		7,789
Total Assets	$	339,446	$	1,321,472	$	0	$	1,660,918
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,996	$	0	$	5,996
Total Liabilities	$	0	$	5,996	$	0	$	5,996

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of October 31, 2015, in addition to $648.2 million of cash.

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

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

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

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

______________ 

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

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

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

Derivative Financial Instruments

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

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

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

	As of
	October 31, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	1,067,250	$	942,086
Fair value of foreign currency derivative contracts	$	1,793	$	4,917

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

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	October 31, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	7,789	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	5,996	$	5,694

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three and nine months ended October 31, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Losses on Derivative Instruments Recognized in Income
		Three Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	(2,888	)	$	(3,068	)
Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Nine Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	9,773		$	(2,964	)

Strategic Investments

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

As of October 31, 2015, the Company had six investments in marketable equity securities with a fair value of $26.0 million, which includes an unrealized gain of $18.3 million. As of January 31, 2015, the Company had four investments in marketable equity securities with a fair value of $17.8 million, which included an unrealized gain of $13.1 million. The change

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in the fair value of the investments in publicly held companies is recorded in the condensed consolidated balance sheets within strategic investments and accumulated other comprehensive loss.

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

As of October 31, 2015 and January 31, 2015, the carrying value of the Company’s non-marketable debt and equity securities was $470.8 million and $158.0 million, respectively. The estimated fair value of the non-marketable debt and equity securities was approximately $654.0 million and $280.0 million as of October 31, 2015 and January 31, 2015, respectively. These investments are measured using the cost method of accounting, therefore the unrealized gains of $183.2 million and $122.0 million as of October 31, 2015 and January 31, 2015, respectively, are not recorded in the condensed consolidated financial statements.

Investment Income

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Interest income	$	3,700		$	2,720		$	9,919		$	7,051
Realized gains	257			78			3,197			424
Realized losses	(450		)	(176		)	(1,765		)	(420		)
Total investment income	$	3,507		$	2,622		$	11,351		$	7,055

Reclassification adjustments out of accumulated other comprehensive loss into net income (loss) were immaterial for the three and nine months ended October 31, 2015 and 2014, respectively.

3. Property and Equipment

Property and Equipment

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

	As of
	October 31, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	614,349			125,289
Computers, equipment and software	1,259,210			1,171,762
Furniture and fixtures	77,606			71,881
Leasehold improvements	450,565			376,761
	$	2,585,618		$	1,745,693
Less accumulated depreciation and amortization	(843,476		)	(619,827		)
	$	1,742,142		$	1,125,866

Depreciation and amortization expense totaled $77.4 million and $64.6 million during the three months ended October 31, 2015 and 2014, respectively, and totaled $226.6 million and $181.7 million during the nine months ended October 31, 2015 and 2014, respectively.

Computers, equipment and software at October 31, 2015 and January 31, 2015 included a total of $743.3 million and $734.7 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $285.4 million and $206.7 million, respectively, at October 31, 2015 and January 31, 2015. Amortization of assets under capital leases is included in depreciation and amortization expense.

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In October 2015, the Company sold approximately 8.8 net acres of undeveloped real estate and the associated perpetual parking rights in San Francisco, California, which were classified as held for sale. The total proceeds from the sale were $157.1 million, of which the Company received $127.1 million during the three months ended October 31, 2015 and previously received a nonrefundable deposit in the amount of $30.0 million during the three months ended April 30, 2014. The Company recognized a gain of $21.8 million, net of closing costs, on the sale of this portion of the Company’s land and building improvements and perpetual parking rights.

In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street (“350 Mission”) in San Francisco, California. The space rented is for the total office space available in the building. As a result of the Company’s involvement during the building's construction, the Company is considered for accounting purposes to be the owner of the building. As of October 31, 2015, the Company had capitalized $175.9 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $11.9 million and $194.4 million, respectively. The financing obligation carrying value also includes $25.0 million of tenant improvement obligations and approximately $5.7 million of imputed interest. The total expected financing obligation associated with this lease upon completion of the construction of the building, inclusive of the amounts currently recorded, is $335.5 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord in phases as the office space becomes ready for occupancy. To the extent that operating expenses for 350 Mission are material, the Company, as the deemed accounting owner, will record the operating expenses. In April 2015, the building was placed into service and depreciation commenced.

There was no impairment of long-lived assets during the three and nine months ended October 31, 2015 and 2014, respectively.

4. Business Combinations

50 Fremont

In February 2015, the Company acquired 50 Fremont Street, a 41-story building totaling approximately 817,000 rentable square feet located in San Francisco, California (“50 Fremont”). At the time of the acquisition, the Company was leasing approximately 500,000 square feet of the available space in 50 Fremont. As of October 31, 2015, the Company occupied approximately 567,000 square feet. The Company acquired 50 Fremont for the purpose of expanding its global headquarters in San Francisco. Pursuant to the acquisition agreement, the Company also acquired existing third-party leases and other intangible property, terminated the Company’s existing office leases with the seller and assumed the seller's outstanding loan on 50 Fremont. In accordance with Accounting Standards Codification 805 (“ASC 805”), Business Combinations, the Company accounted for the building purchase as a business combination.

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

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

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

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

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

21

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

Other Business Combinations

During the nine months ended October 31, 2015, the Company acquired several companies for an aggregate of $60.1 million in cash, net of cash acquired, and has included the financial results of these companies in its condensed consolidated financial statements from the respective dates of acquisition. The Company accounted for these transactions as business combinations. In allocating the purchase consideration for each company based on estimated fair values, the Company recorded $66.4 million of goodwill. Some of the goodwill balance associated with these transactions is deductible for U.S. income tax purposes. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

Goodwill

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

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combinations	66,394
Balance as of October 31, 2015	$	3,849,054

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5. Debt

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						October 31, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,088,910	$	1,070,692

___________ 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

23

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

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

	As of
	October 31, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(61,090		)	(79,308		)
Net carrying amount	$	1,088,910		$	1,070,692

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

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

The total estimated fair value of the Company’s 0.25% Senior Notes at October 31, 2015 was $1.5 billion. The fair value was determined based on the closing trading price per $100 of the 0.25% Senior Notes as of the last day of trading for the third quarter of fiscal 2016.

Based on the closing price of the Company’s common stock of $77.71 on October 30, 2015, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $195.1 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended October 31, 2015.

Note Hedges

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

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

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

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Warrants

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

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

Revolving Credit Facility

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

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on the Company’s ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on the Company’s activities each defined specifically in the Credit Agreement. The Company was in compliance with the Credit Agreement’s covenants as of October 31, 2015.

In March 2015, the Company paid down $300.0 million of outstanding borrowings under the Credit Facility. There are currently no outstanding borrowings held under the Credit Facility as of October 31, 2015.

The weighted average interest rate on borrowings under the Credit Facility was 1.6% for the period beginning in October 2014 and ended March 31, 2015. The Company continues to pay a fee of 0.15% on the undrawn amount of the Credit Facility.

Loan Assumed on 50 Fremont

The Company assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan initially requires interest only payments. Beginning in fiscal year 2019, principal and interest payments are required, with the remaining principal due at maturity. For the three and nine months ended October 31, 2015, total interest expense recognized was $1.9 million and $5.4 million, respectively. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that the Company was in compliance with as of October 31, 2015.

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

The following table sets forth total interest expense recognized related to the 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Contractual interest expense	$	2,843	$	2,190	$	9,036	$	7,777
Amortization of debt issuance costs	1,027		1,132		3,077		3,490
Amortization of debt discount	6,148		8,637		18,317		28,837
	$	10,018	$	11,959	$	30,430	$	40,104

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6. Other Balance Sheet Accounts

Prepaid Expenses and Other Current Assets

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, net	$	42,605	$	35,528
Prepaid income taxes	23,167		21,514
Customer contract asset	3,572		16,620
Other taxes receivable	32,187		27,540
Prepaid expenses and other current assets	210,378		179,352
	$	311,909	$	280,554

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

Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $172,728 and $136,314, respectively	$	114,058	$	96,617
Acquired developed technology, net of accumulated amortization of $459,215 and $392,736, respectively	282,955		336,781
	$	397,013	$	433,398

Capitalized internal-use software amortization expense totaled $12.9 million and $9.5 million for the three months ended October 31, 2015 and 2014, respectively, and totaled $36.4 million and $26.2 million for the nine months ended October 31, 2015 and 2014, respectively. Acquired developed technology amortization expense totaled $22.1 million and $22.5 million for the three months ended October 31, 2015 and 2014, respectively, and totaled $66.5 million and $75.9 million for the nine months ended October 31, 2015 and 2014, respectively.

The Company capitalized $1.3 million and $1.5 million of stock-based expenses related to capitalized internal-use software development during the three months ended October 31, 2015 and 2014, respectively, and $4.4 million and $3.6 million for the nine months ended October 31, 2015 and 2014, respectively.

26

Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	7,236	$	9,275
Long-term deposits	20,126		19,715
Purchased intangible assets, net of accumulated amortization of $191,807 and $130,968, respectively	277,898		329,971
Acquired intellectual property, net of accumulated amortization of $20,837 and $15,695, respectively	12,167		15,879
Customer contract asset	115		1,447
Other	79,185		76,259
	$	396,727	$	452,546

Purchased intangible assets amortization expense for the three months ended October 31, 2015 and 2014 was $20.1 million and $14.9 million, respectively and for the nine months ended October 31, 2015 and 2014 was $60.8 million and $44.9 million, respectively. Acquired intellectual property amortization expense for the three months ended October 31, 2015 and 2014 was $1.7 million and $1.2 million, respectively and for the nine months ended October 31, 2015 and 2014 was $5.1 million and $3.6 million, respectively.

27

Accounts Payable, Accrued Expenses and Other Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Accounts payable	$	88,755	$	95,537
Accrued compensation	415,958		457,102
Accrued other liabilities	424,004		321,032
Accrued income and other taxes payable	154,020		184,844
Accrued professional costs	31,234		16,889
Customer liability, current (1)	10,315		13,084
Accrued rent	13,477		14,847
Financing obligation, building in progress-leased facility, current	11,930		0
	$	1,149,693	$	1,103,335

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

Other Noncurrent Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	113,801	$	94,396
Customer liability, noncurrent	81		1,026
Financing obligation, building in progress-leased facility	194,350		125,289
Long-term lease liabilities and other	569,816		701,612
	$	878,048	$	922,323

7. Stockholders’ Equity

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

As of October 31, 2015, $74.4 million has been withheld on behalf of employees for future purchases under the ESPP and is recorded in accounts payable, accrued expenses and other liabilities.

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

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Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	38,833,915		0		0.00
2014 Inducement Equity Incentive Plan	222,281		0		0.00
Options granted under all plans	(1,243,913	)	1,243,913		70.06
Restricted stock activity	(1,717,493	)	0		0.00
Stock grants to board and advisory board members	(147,305	)	0		0.00
Exercised	0		(7,139,738	)	34.67
Plan shares expired	(1,533,380	)	0		0.00
Canceled	1,623,954		(1,623,954	)	46.33
Balance as of October 31, 2015	66,827,597		21,938,582		$	48.82	$	633,719,094
Vested or expected to vest			20,636,830		$	48.30	$	606,931,261
Exercisable as of October 31, 2015			7,999,144		$	37.53	$	321,427,698

The total intrinsic value of the options exercised during the nine months ended October 31, 2015 and 2014 was $251.3 million and $202.0 million, respectively. The intrinsic value is the difference between the current market value of the stock and the exercise price of the stock option.

The weighted-average remaining contractual life of vested and expected to vest options is approximately 4.5 years.

As of October 31, 2015, options to purchase 7,999,144 shares were vested at a weighted average exercise price of $37.53 per share and had a remaining weighted-average contractual life of approximately 2.9 years. The total intrinsic value of these vested options as of October 31, 2015 was $321.4 million.

The following table summarizes information about stock options outstanding as of October 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $29.38	3,115,316	2.3	$	24.20	2,756,842	$	24.42
$29.67 to $39.09	4,239,789	2.1	37.94		2,856,120	37.86
$40.19 to $52.14	567,287	4.3	43.27		212,321	43.57
$52.30	4,107,344	5.1	52.30		1,693,467	52.30
$53.60 to $57.79	1,572,567	5.6	55.24		424,396	55.15
$59.34	6,561,546	6.1	59.34		0	0.00
$59.37 to $77.37	1,774,733	6.3	67.22		55,998	62.64
	21,938,582	4.5	$	48.82	7,999,144	$	37.53

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Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	2,714,178		0.001
Canceled	(2,296,785	)	0.001
Vested and converted to shares	(6,052,630	)	0.001
Balance as of October 31, 2015	17,508,771		$	0.001	$	1,360,607
Expected to vest	15,326,839				$	1,191,049

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

The weighted-average grant date fair value of the restricted stock issued for the nine months ended October 31, 2015 and 2014 was $70.26 and $58.84, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at October 31, 2015:

Options outstanding	21,938,582
Restricted stock awards and units outstanding	17,508,771
Stock available for future grant:
2013 Equity Incentive Plan	66,132,255
2014 Inducement Equity Incentive Plan	695,342
Amended and Restated 2004 Employee Stock Purchase Plan	8,259,824
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	149,152,534

8. Income Taxes

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year to date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the nine months ended October 31, 2015, the Company reported a tax provision of $90.3 million on a pretax income of $68.4 million, which resulted in an effective tax rate of 132 percent. The tax provision recorded was related to income taxes in profitable jurisdictions outside of the United States and the current tax expense in the United States. The Company had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock.

The U.S. Tax Court (“Tax Court”) recently issued an opinion favorable to Altera Corporation (“Altera”) with respect to Altera’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement with Altera’s foreign subsidiary. In its opinion, the Tax Court accepted Altera’s position of excluding stock-based compensation from its inter-company cost-sharing arrangement. Once the final decision is issued by the Tax Court, the IRS could still appeal such decision; as a result, the Company will continue to monitor this matter and the related potential impacts to its financial statements. During the quarter ended October 31, 2015, the Company amended its inter-company cost-sharing arrangement to exclude stock-based compensation expense beginning in fiscal 2016 and accordingly, the Company recognized the related tax impact through its year-to-date tax provision.  

30

For the nine months ended October 31, 2014, the Company reported a tax provision of $37.3 million on a pretax loss of $159.6 million, which resulted in a negative effective tax rate of 23 percent. The tax provision recorded was primarily related to income taxes in profitable jurisdictions outside the United States.

Tax Benefits Related to Stock-Based Compensation

The total income tax benefit related to stock-based awards was $130.8 million and $125.7 million for nine months ended October 31, 2015 and 2014, respectively, the majority of which was not recognized as a result of the valuation allowance.

Unrecognized Tax Benefits and Other Considerations

The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Germany, Switzerland and the United Kingdom. To date, the Company has not received any proposed adjustments that would result in a material impact to its income tax provision.

The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. However, the outcome of the tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future. Based on the information to-date, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $32.0 million may occur in the next 12 months.

9. Earnings/Loss Per Share

Basic earnings/loss per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the fiscal period. Diluted earnings/loss per share is computed by giving effect to all potential weighted average dilutive common stock, including options, restricted stock units, warrants and the convertible senior notes. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three and nine months ended October 31, 2015 and 2014 is the same as basic loss per share as there is a net loss in the period and inclusion of potentially issuable shares is anti-dilutive.

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Numerator:
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Denominator:
Weighted-average shares outstanding for basic loss per share	664,131			629,548			659,160			619,748
Effect of dilutive securities:
Convertible senior notes	0			0			0			0
Employee stock awards	0			0			0			0
Warrants	0			0			0			0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,131			629,548			659,160			619,748

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

31

	Three Months Ended October 31,		Nine Months Ended October 31,
	2015	2014	2015	2014
Stock awards	20,191	19,922	22,634	20,115
Convertible senior notes	17,309	25,820	17,309	28,834
Warrants	17,309	44,253	17,309	44,253

10. Commitments

Letters of Credit

As of October 31, 2015, the Company had a total of $70.4 million in letters of credit outstanding substantially in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through December 2030.

Leases

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

As of October 31, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining three months of fiscal 2016	$	16,437		$	87,285	$	1,434
Fiscal 2017	116,792			347,232		16,877
Fiscal 2018	121,012			311,403		21,107
Fiscal 2019	114,085			241,180		21,551
Fiscal 2020	201,507			213,419		21,995
Thereafter	0			1,344,224		252,517
Total minimum lease payments	569,833			$	2,544,743	$	335,481
Less: amount representing interest	(61,973		)
Present value of capital lease obligations	$	507,860

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of October 31, 2015, $206.3 million of the total obligation noted above was recorded to Financing obligation, building in progress - leased facility, of which the current portion is included in "Accounts payable, accrued expenses, and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the condensed consolidated balance sheets.

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

The terms of the lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Of the total operating lease commitment and financing obligation, building in progress- leased facility balance of $2.9 billion, approximately $1.9 billion is related to facilities space. The remaining commitment amount is related to computer equipment, other leases, data center capacity and our development and test data center.

11. Legal Proceedings and Claims

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

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In July 2015, the Company and certain of its current and former directors were named as defendants in a purported shareholder derivative action in the Superior Court for the State of California, County of San Francisco. The plaintiff filed an amended version of this derivative complaint in November 2015. The derivative complaint alleges that excessive compensation was paid to such directors for their service. The derivative complaint includes allegations of breach of fiduciary duty and unjust enrichment and seeks restitution and disgorgement of a portion of the directors' compensation, as well as reform of a Company equity plan. Because the complaint is derivative in nature, it does not seek monetary damages from the Company.

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

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

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

12. Related-Party Transactions

In January 1999, the Salesforce.com Foundation, also referred to as the Foundation, was chartered on an idea of leveraging the Company’s people, technology, and resources to help improve communities around the world. The Company calls this integrated philanthropic approach the 1-1-1 model. Beginning in 2008, Salesforce.org, which is a non-profit mutual benefit corporation, was established to resell the Company's services to nonprofit organizations and certain higher education organizations.

The Company’s chairman is the chairman of both the Foundation and Salesforce.org. The Company’s chairman holds one of the three Foundation board seats. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of Salesforce.org’s ten board seats. The Company does not control the Foundation’s or Salesforce.org's activities, and accordingly, the Company does not consolidate either of the related entities' statement of activities with its financial results.

Since the Foundation’s and Salesforce.org’s inception, the Company has provided at no charge certain resources to those entities employees such as office space, furniture, equipment, facilities, services, and other resources. The value of these items was approximately $0.9 million for the nine months ended October 31, 2015.

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

Additionally, the Company has donated subscriptions of the Company’s services to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain education entities. The Company does not charge Salesforce.org for these subscriptions, therefore revenue from subscriptions provided to non-profit organizations is donated back to the community through charitable grants made by the Foundation and Salesforce.org. The reseller agreement was amended in August 2015 to include additional customer segments and certain customers outside the U.S. and in October 2015 to add an addendum with model clauses for the processing of personal data transferred from the European Economic Area. The value of the subscriptions pursuant to reseller agreements was approximately $48.2 million for the nine months ended October 31, 2015. The Company plans to continue these programs.

The Company has committed to donate $4.0 million to the Foundation to further support its philanthropic mission. This amount will be paid to the Foundation during this fiscal year.

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

This Quarterly Report on form 10-Q, including the following discussion in“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Words such as “expects,” “anticipates,” “aims,” “projects,” “intends,” “plans,” “believes,” “estimates,” “seeks,” “assumes,” “may,” “should,” “could,” “foresees,” “forecasts,” “predicts,” variations of such words and similar expressions are intended to identify such forward-looking statements, which may consist of, among other things, trend analyses and statements regarding future events, future financial performance, anticipated growth and industry prospects. These forward-looking statements are based on current expectations, estimates and forecasts, as well as the beliefs and assumptions of our management, and are subject to risks and uncertainties that are difficult to predict, including the effect of general economic and market conditions; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms; our service performance and security; the expenses associated with new data centers; additional data center capacity; real estate and office facilities space; our operating results; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow and maintain deferred revenue and unbilled deferred revenue; our ability to protect our intellectual property rights; our ability to develop our brands; our ability to realize the benefits from strategic partnerships and investments; our reliance on third- party hardware, software and platform providers; the effect of evolving government regulations; the valuation of our deferred tax assets; the potential availability of additional tax assets in the future; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding convertible notes, revolving credit facility and loan associated with 50 Fremont; compliance with our debt covenants and capital lease obligations; and current and potential litigation involving us. These and other risks and uncertainties may cause our actual results to differ materially and adversely from those expressed in any forward-looking statements. Readers are directed to risks and uncertainties identified below under “Risk Factors” and elsewhere in this report for additional detail regarding factors that may cause actual results to be different than those expressed in our forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

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

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

• strengthening our market-leading solutions;

• extending distribution into new and high-growth categories;

• expanding strategic relationships with our existing customers;

• pursuing new customers;

• reducing customer attrition;

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

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

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

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

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

Our typical subscription contract term is 12 to 36 months, although terms range from one to 60 months, so during any fiscal reporting period only a subset of active subscription contracts is eligible for renewal. We calculate our attrition rate as of the end of each month. Our current attrition rate calculation does not include the Marketing Cloud service offerings. Our attrition rate was approximately nine percent as of October 31, 2015. We expect our attrition rate to remain consistent as we continue to expand our enterprise business and invest in customer success and related programs.

We expect marketing and sales costs, which were 48 percent and 52 percent of our total revenues for the three months ended October 31, 2015 and 2014, respectively and 49 percent and 51 percent for the nine months ended October 31, 2015 and 2014, respectively, to continue to represent a substantial portion of total revenues in the future as we seek to grow our customer base, sell more products to existing customers, and build greater brand awareness.

In February 2015, we purchased a 41-story office building in San Francisco, California which we refer to as 50 Fremont. As part of the business combination accounting for the purchase, we recognized a one-time non-cash net gain of $36.6 million during the three months ended April 30, 2015 for the termination of the operating leases that existed prior to the purchase. As described within "Non-GAAP Financial Measures" the one-time non-cash net gain of $36.6 million has been deducted from our GAAP net income (loss) to arrive to our Non-GAAP net income.

In October 2015, we sold approximately 8.8 net acres of undeveloped real estate and the associated perpetual parking rights in San Francisco, California, which were classified as held for sale. The total proceeds from the sale were $157.1 million, of which we received $127.1 million during the three months ended October 31, 2015 and previously received a nonrefundable deposit in the amount of $30.0 million during the three months ended April 30, 2014. We recognized a gain of $21.8 million, net of closing costs, on the sale of this portion of our land and building improvements and perpetual parking rights.

During the nine months ended October 31, 2015, we increased our strategic investments portfolio by $337.8 million. These investments were in privately held companies, including some development stage companies. We plan to continue to make strategic investments in the future.

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Fiscal Year

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

Operating Segments

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

Sources of Revenues

We derive our revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing our enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees. Subscription and support revenues accounted for approximately 93 percent of our total revenues for the nine months ended October 31, 2015. Subscription revenues are driven primarily by the number of paying subscribers, varying service types, the price of our service and renewals. We define a “customer” as a separate and distinct buying entity (e.g., a company, a distinct business unit of a large corporation, a partnership, etc.) that has entered into a contract to access our enterprise cloud computing services. We define a “subscription” as a unique user account purchased by a customer for use by its employees or other customer-authorized users, and we refer to each such user as a “subscriber.” The number of paying subscriptions at each of our customers ranges from one to hundreds of thousands. None of our customers accounted for more than five percent of our revenues during the nine months ended October 31, 2015 and 2014.

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

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

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

Revenue by Cloud Service Offering

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

Subscription and support revenues consisted of the following by core service offering (in millions):

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	Three Months Ended October 31,					Nine Months Ended October 31,
	2015		2014		Variance- Percent	2015		2014		Variance- Percent
Sales Cloud	$	688.7	$	625.0	10%	$	1,990.1	$	1,811.7	10%
Service Cloud	469.5		339.6		38%	1,322.4		953.1		39%
App Cloud and Other	269.1		192.4		40%	740.4		538.7		37%
Marketing Cloud	169.0		131.5		29%	470.1		364.9		29%
Total	$	1,596.3	$	1,288.5		$	4,523.0	$	3,668.4

Subscription and support revenues from Analytics Cloud and Communities Cloud, which were introduced in October 2014, were not significant for the three and nine months ended October 31, 2015. The Analytics Cloud revenue is included with App Cloud and Other in the table above. Communities Cloud revenue is included in either Sales Cloud, Service Cloud or App Cloud and Other revenue depending on the primary service offering purchased.

In situations where a customer purchases multiple cloud offerings, such as through an Enterprise License Agreement, we allocate the contract value to each core service offering based on the customer’s estimated product demand plan and the service that was provided at the inception of the contract. We do not update these allocations based on actual product usage during the term of the contract. We have allocated approximately 10 percent of our total subscription and support revenues for the three and nine months ended October 31, 2015 and 2014, based on customers’ estimated product demand plans and these allocated amounts are included in the table above.

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

Our Sales Cloud service offering is our most widely distributed service offering and has historically been the largest contributor of subscription and support revenues. We estimate that for the remainder of fiscal 2016, subscription and support revenues from the Sales Cloud service offering will continue to be the largest contributor of subscription and support revenue.

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

Deferred revenue primarily consists of billings to customers for our subscription service. Over 90 percent of the value of our billings to customers is for our subscription and support service. We generally invoice our customers in annual cycles. Approximately 79 percent of the value of all subscription and support related invoices were issued with annual terms during the three months ended October 31, 2015 in comparison to 73 percent during the same period a year ago. Occasionally, we bill customers for their multi-year contract on a single invoice which results in an increase in noncurrent deferred revenue. We typically issue renewal invoices in advance of the renewal service period, and depending on timing, the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters. This may result in an increase in deferred revenue and accounts receivable. There is a disproportionate weighting towards annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns. Our fourth quarter has historically been our strongest quarter for new business and renewals. The year on year compounding effect of this seasonality in both billing patterns and overall new and renewal business causes the value of invoices that we generate in the fourth quarter for both new business and renewals to increase as a proportion of our total annual billings. Accordingly, because of this billing activity, our first quarter is historically our largest collections and operating cash flow quarter.

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

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

	April 30, 2015		July 31, 2015		October 31, 2015
Fiscal 2016
Accounts receivable, net	$	926,381	$	1,067,799	$	1,060,726
Deferred revenue, current and noncurrent	3,056,820		3,034,991		2,846,510
Operating cash flow (1)	730,857		304,411		117,907
Unbilled deferred revenue, a non-GAAP measure	6.0 bn		6.2 bn		6.7 bn

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

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

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

Unbilled Deferred Revenue, a Non-GAAP Measure

The deferred revenue balance on our condensed consolidated balance sheets does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Unbilled deferred revenue represents future billings under our subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. Unbilled deferred revenue was approximately $6.7 billion as of October 31, 2015 and approximately $5.7 billion as of January 31, 2015. Our typical contract length is between 12 and 36 months. We expect that the amount of unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of large customer subscription agreements, varying billing cycles of subscription agreements, the specific timing of customer renewals, foreign currency fluctuations, the timing of when unbilled deferred revenue is to be recognized as revenue, and changes in customer financial circumstances. For multi-year subscription agreements billed annually, the associated unbilled deferred revenue is typically high at the beginning of the contract period, zero just prior to renewal, and increases if the agreement is renewed. Low unbilled deferred revenue attributable to a particular subscription agreement is often associated with an impending renewal and may not be an indicator of the likelihood of renewal or future revenue from such customer. Accordingly, we expect that the amount of aggregate unbilled deferred revenue will change from year-to-year depending in part upon the number and dollar amount of subscription agreements at particular stages in their renewal cycle. Such fluctuations are not a reliable indicator of future revenues. Unbilled deferred revenue does not include minimum revenue commitments from indirect sales channels, as we recognize revenue, deferred revenue, and any unbilled deferred revenue upon sell-through to an end user customer.

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Cost of Revenues and Operating Expenses

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

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

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

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

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

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

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

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

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During the nine months ended October 31, 2015, we recognized stock-based expense of $434.7 million. As of October 31, 2015, the aggregate stock compensation remaining to be amortized to costs and expenses over a weighted-average period of 2.5 years was $1.1 billion. We expect this stock compensation balance to be amortized as follows: $133.2 million during the remaining three months of fiscal 2016; $437.5 million during fiscal 2017; $314.9 million during fiscal 2018; $171.0 million during fiscal 2019 and $19.6 million during fiscal 2020. The expected amortization reflects only outstanding stock awards as of October 31, 2015 and assumes no forfeiture activity. We expect to continue to issue stock-based awards to our employees in future periods.

Amortization of Purchased Intangibles from Business Combinations and the Purchase of 50 Fremont. Our cost of revenues, operating expenses and other expense include amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists, acquired leases and customer relationships. We expect this expense to increase as we acquire more businesses.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

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

Revenue Recognition. We derive our revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing our enterprise cloud computing services and from customers purchasing additional support beyond the standard support that is included in the basic subscription fee; and (2) related professional services such as process mapping, project management, implementation services and other revenue. “Other revenue” consists primarily of training fees.

We commence revenue recognition when all of the following conditions are satisfied:

• there is persuasive evidence of an arrangement;

• the service has been or is being provided to the customer;

• the collection of the fees is reasonably assured; and

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

Our subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Subscription and Support Revenues

Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date our service is made available to customers. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Professional Services and Other Revenues

The majority of our professional services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized after the services are performed.

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Multiple Deliverable Arrangements

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

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

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

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

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

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

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

During the nine months ended October 31, 2015, we deferred $200.9 million of commission expenditures and we amortized $232.8 million to sales expense. During the same period a year ago, we deferred $171.0 million of commission expenditures and we amortized $186.5 million to sales expense. Deferred commissions on our condensed consolidated balance sheets totaled $356.3 million at October 31, 2015 and $388.2 million at January 31, 2015.

Long- Lived Assets and Impairment Assessment. We evaluate long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset's carrying amount may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Capitalized Internal-Use Software Costs. We are required to follow the guidance of Accounting Standards Codification 350 (“ASC 350”), Intangibles- Goodwill and Other in accounting for the cost of computer software developed for internal-

41

use and the accounting for web-based product development costs. ASC 350 requires companies to capitalize qualifying computer software costs, which are incurred during the application development stage, and amortize these costs on a straight-line basis over the estimated useful life of the respective asset. We deliver our enterprise cloud computing solutions as a service via all the major Internet browsers and on leading major mobile device operating systems. As a result of this software as a service delivery model, we believe we have larger capitalized costs as compared to traditional enterprise software companies as they are required to use a different accounting standard.

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

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

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

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

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

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

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

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

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

• discount rates.

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

Stock-Based Options and Awards. We recognize the fair value of our stock options and awards on a straight-line basis over the requisite service period of the option or award which is the vesting term of generally four years for stock options and restricted stock awards and one year for shares issued pursuant to our Employee Stock Purchase Plan (“ESPP”). The fair value of each option or ESPP share or stock purchase right is estimated on the date of grant using the Black-Scholes option pricing

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model. The estimated forfeiture rate applied is based on historical forfeiture rates. We evaluate the forfeiture rates at least annually, or when events or circumstances indicate a change may be needed. This may cause a fluctuation in our stock-based expense in the period of change. Inputs into the Black-Scholes option pricing model and other factors that may affect our stock-based expense include:

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

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

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

• The probability of achieving performance conditions to which certain awards may be subject.

Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the condensed consolidated statements of operations in the period that includes the enactment date. At each of the interim financial reporting periods, we compute our tax provision by applying an estimated annual effective tax rate to year to date ordinary income or loss and adjust the provision for discrete tax items recorded in the same period. The estimated annual effective tax rate at each interim period represents our best estimate based on evaluations of possible future transactions and may be subject to subsequent refinement or revision. We consider the valuation allowance in estimating the annual effective tax rate. As a result, the annual effective tax rate could be volatile and is therefore difficult to forecast in future periods.

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

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

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

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

43

funding at a lower valuation. In determining the estimated fair value of our strategic investments in privately held companies, we utilize the most recent data available to us. Valuations of privately held companies are inherently complex due to the lack of readily available market data.

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

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Results of Operations

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Revenues:
Subscription and support	$	1,596,333		$	1,288,513		$	4,522,939		$	3,668,406
Professional services and other	115,634			95,142			334,879			260,572
Total revenues	1,711,967			1,383,655			4,857,818			3,928,978
Cost of revenues (1)(2):
Subscription and support	303,045			238,746			870,023			666,611
Professional services and other	120,638			94,465			340,846			266,736
Total cost of revenues	423,683			333,211			1,210,869			933,347
Gross profit	1,288,284			1,050,444			3,646,949			2,995,631
Operating expenses (1)(2):
Research and development	239,212			195,460			695,440			586,927
Marketing and sales	818,820			709,643			2,349,449			2,020,956
General and administrative	186,818			167,383			544,314			498,565
Operating lease termination resulting from purchase of 50 Fremont, net	0			0			(36,617		)	0
Total operating expenses	1,244,850			1,072,486			3,552,586			3,106,448
Income (loss) from operations	43,434			(22,042		)	94,363			(110,817		)
Investment income	3,507			2,622			11,351			7,055
Interest expense	(18,249		)	(17,682		)	(53,020		)	(56,355		)
Other expense (1)(3)	(7,093		)	(372		)	(6,064		)	(15,095		)
Gain on sales of land and building improvements	21,792			15,625			21,792			15,625
Income (loss) before provisions for income taxes	43,391			(21,849		)	68,422			(159,587		)
Provisions for income taxes	(68,548		)	(17,075		)	(90,339		)	(37,336		)
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	$	20,296	$	20,351	$	60,825	$	70,294
Marketing and sales	18,966		15,095		57,995		44,708
Other non-operating expense	761		0		2,877		0

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	$	17,516	$	14,118	$	49,237	$	38,905
Research and development	31,534		26,868		96,508		87,264
Marketing and sales	69,561		72,892		211,819		210,510
General and administrative	25,706		25,582		77,092		76,284

(3) Amount includes approximately $10.2 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the nine months ended October 31, 2014.

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Revenues by geography were as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Americas	$	1,258,148	$	995,331	$	3,575,441	$	2,812,654
Europe	302,704		252,982		848,413		730,324
Asia Pacific	151,115		135,342		433,964		386,000
	$	1,711,967	$	1,383,655	$	4,857,818	$	3,928,978

Americas revenue attributed to the United States was approximately 95 percent and 94 percent for the three and nine months ended October 31, 2015 and 2014, respectively.

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Revenues:
Subscription and support	93	%	93	%	93	%	93	%
Professional services and other	7		7		7		7
Total revenues	100		100		100		100
Cost of revenues (1)(2):
Subscription and support	18		17		18		17
Professional services and other	7		7		7		7
Total cost of revenues	25		24		25		24
Gross profit	75		76		75		76
Operating expenses (1)(2):
Research and development	14		14		14		15
Marketing and sales	48		52		49		51
General and administrative	11		12		11		13
Operating lease termination resulting from purchase of 50 Fremont, net	0		0		(1	)	0
Total operating expenses	73		78		73		79
Income (loss) from operations	2		(2	)	2		(3	)
Investment income	0		0		0		0
Interest expense	(1	)	(1	)	(1	)	(1	)
Other income (expense) (1)	0		0		0		0
Gain on sales of land and building improvements	2		1		1		0
Income (loss) before provisions for income taxes	3		(2	)	2		(4	)
Provisions for income taxes	(4	)	(1	)	(2	)	(1	)
Net loss	(1	)%	(3	)%	0	%	(5	)%

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	1	%	1	%	1	%	2	%
Marketing and sales	1		1		1		1
Other non-operating expense	0		0		0		0

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Cost of revenues	1	%	1	%	1	%	1	%
Research and development	2		2		2		2
Marketing and sales	4		5		4		5
General and administrative	1		2		2		2

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Americas	73	%	72	%	74	%	72	%
Europe	18		18		17		18
Asia Pacific	9		10		9		10
	100	%	100	%	100	%	100	%

Revenues and deferred revenue in constant currency, as follows:

Revenue constant currency growth rates (as compared to the comparable prior periods)	Three Months Ended October 31, 2015 compared to Three Months Ended October 31, 2014	Three Months Ended October 31, 2014 compared to Three Months Ended October 31, 2013
Americas	27%	29%
Europe	28%	34%
Asia Pacific	25%	25%
Total growth	27%	30%

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

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

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

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Three Months Ended October 31, 2015 and 2014

Revenues.

	Three Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars		Percent
Subscription and support	$	1,596,333	$	1,288,513	$	307,820	24%
Professional services and other	115,634		95,142		20,492		22%
Total revenues	$	1,711,967	$	1,383,655	$	328,312	24%

Total revenues were $1.7 billion for the three months ended October 31, 2015, compared to $1.4 billion during the same period a year ago, an increase of $0.3 billion, or 24 percent. On a constant currency basis, total revenues grew 27 percent. Subscription and support revenues were $1.6 billion, or 93 percent of total revenues, for the three months ended October 31, 2015, compared to $1.3 billion, or 93 percent of total revenues, during the same period a year ago, an increase of $0.3 billion, or 24 percent. The increase in subscription and support revenues was due almost entirely to volume-driven increases from new business, which includes new customers, upgrades and additional subscriptions from existing customers. Our attrition rate, which is consistent with the prior year, also played a role in the increase in subscription and support revenues. We continue to invest in a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped maintain our attrition rate. The net price per user per month for our three primary offerings, Professional Edition, Enterprise Edition and Unlimited Edition, varies from period to period, but has remained within a consistent range over the past eight quarters. Changes in the net price per user per month has not been a significant driver of revenue growth for the periods presented. Professional services and other revenues were $115.6 million, or seven percent of total revenues, for the three months ended October 31, 2015, compared to $95.1 million, or seven percent of total revenues, for the same period a year ago, an increase of $20.5 million, or 22 percent. The increase in professional services and other revenues was primarily attributable to higher demand for services from an increased number of customers.

Revenues in Europe and Asia Pacific accounted for $453.8 million, or 27 percent of total revenues, for the three months ended October 31, 2015, compared to $388.3 million, or 28 percent of total revenues, during the same period a year ago, an increase of $65.5 million, or 17 percent. The increase in revenues on a total dollar basis outside of the Americas was the result of the increasing acceptance of our service, our focus on marketing our services internationally and additional resources. Revenues outside of the Americas increased on a total dollar basis in the three months ended October 31, 2015 despite an overall strengthening of the U.S. dollar, which reduced aggregate international revenues by $38.9 million compared to the same period a year ago. We expect revenues outside of the Americas to continue to be negatively impacted in the remainder of fiscal 2016 by the strengthening of the U.S. dollar relative to the Euro, Japanese yen, Australian dollar and British pound in comparison to similar periods in the prior year.

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Cost of Revenues.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Subscription and support	$	303,045		$	238,746		$	64,299
Professional services and other	120,638			94,465			26,173
Total cost of revenues	$	423,683		$	333,211		$	90,472
Percent of total revenues	25		%	24		%

Cost of revenues was $423.7 million, or 25 percent of total revenues, for the three months ended October 31, 2015, compared to $333.2 million, or 24 percent of total revenues, during the same period a year ago, an increase of $90.5 million. The increase in absolute dollars was primarily due to an increase of $36.5 million in employee-related costs, an increase of $3.4 million in stock-based expenses, an increase of $31.4 million in service delivery costs, primarily due to our efforts to increase data center capacity, an increase of $7.4 million in professional and outside services and third party expenses, an increase in allocated overhead and an increase of $6.0 million in depreciation of property and equipment. We have increased our headcount by 37 percent since October 31, 2014 to meet the higher demand for services from our customers. We intend to continue to invest additional resources in our enterprise cloud computing services and data center capacity. We also plan to add additional employees in our professional services group to facilitate the adoption of our services. The timing of these expenses will affect our cost of revenues, both in terms of absolute dollars and as a percentage of revenues in future periods.

Research and Development.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Research and development	$	239,212		$	195,460		$	43,752
Percent of total revenues	14		%	14		%

Research and development expenses were $239.2 million, or 14 percent of total revenues, for the three months ended October 31, 2015, compared to $195.5 million, or 14 percent of total revenues, during the same period a year ago, an increase of $43.8 million. The increase in absolute dollars was primarily due to an increase of $29.9 million in employee-related costs, an increase of $4.7 million in stock-based expense, an increase of $4.6 million in development and test data center expense and an increase of $3.2 million in allocated overhead. We increased our research and development headcount by 16 percent since October 31, 2014 in order to improve and extend our service offerings and develop new technologies. We expect that research and development expenses will increase in absolute dollars and may increase as a percentage of revenues in future periods as we continue to add employees and invest in technology to support the development of new, and improve existing, technologies and the integration of acquired technologies.

Marketing and Sales.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Marketing and sales	$	818,820		$	709,643		$	109,177
Percent of total revenues	48		%	52		%

Marketing and sales expenses were $818.8 million, or 48 percent of total revenues, for the three months ended October 31, 2015, compared to $709.6 million, or 52 percent of total revenues, during the same period a year ago, an increase of $109.2 million. The increase in absolute dollars was primarily due to an increase of $67.5 million in employee-related costs, including travel and entertainment, of which $13.6 million was due to increased amortization of deferred commissions, an increase of $29.8 million in advertising expenses and event costs, an increase of $3.9 million due to amortization of purchased intangibles. Our marketing and sales headcount increased by 20 percent since October 31, 2014. The increase in headcount was primarily attributable to hiring additional sales personnel to focus on adding new customers and increasing penetration within our existing customer base.

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General and Administrative.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
General and administrative	$	186,818		$	167,383		$	19,435
Percent of total revenues	11		%	12		%

General and administrative expenses were $186.8 million, or 11 percent of total revenues, for the three months ended October 31, 2015, compared to $167.4 million, or 12 percent of total revenues, during the same period a year ago, an increase of $19.4 million. The increase was primarily due to an increase of $8.7 million in employee-related costs and an increase of $4.6 million in professional services expense. Our general and administrative headcount increased by 12 percent since October 31, 2014 as we added personnel to support our growth.

Income (loss) from operations.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Income (loss) from operations	$	43,434		$	(22,042	)	$	65,476
Percent of total revenues	2		%	(2		)%

Income from operations for the three months ended October 31, 2015 was $43.4 million and included $144.3 million of stock-based expenses and $39.3 million of amortization of purchased intangibles. During the same period a year ago, loss from operations was $22.0 million and included $139.5 million of stock-based expenses and $35.4 million of amortization of purchased intangibles. The increase in income from operations is primarily due to a higher revenue growth rate compared to the operating expense growth rate.

Investment income.

	Three Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars
Investment income	$	3,507	$	2,622	$	885

Investment income consists of income on our cash and marketable securities balances. Investment income was $3.5 million for the three months ended October 31, 2015 and was $2.6 million during the same period a year ago. The increase was due to earnings on higher cash and marketable securities balances.

Interest expense.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Interest expense	$	(18,249	)	$	(17,682	)	$	(567	)
Percent of total revenues	(1		)%	(1		)%

Interest expense consists of interest on our convertible senior notes, capital leases, loan assumed on 50 Fremont. Interest expense, net of interest costs capitalized, was $18.2 million for the three months ended October 31, 2015 and was $17.7 million during the same period a year ago.

Other expense.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Other expense	$	(7,093	)	$	(372	)	$	(6,721	)

Other expense primarily consists of non-operating costs such as foreign currency transaction gains and losses and activity associated with real estate and strategic investment transactions. Other expense for the three months ended October 31, 2015 as

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compared to the same period a year ago, increased primarily due to activity associated with strategic investments, foreign exchange rate fluctuations, and real estate transactions.

Gain on sales of land and building improvements.

	Three Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars
Gain on sales of land and building improvements	21,792		15,625		6,167
Percent of total revenues	2	%	1	%

Gain on sales of land and building improvements consists of the gain the company recognized from sales of undeveloped real estate and a portion of associated perpetual parking rights in San Francisco, California. Gain on sales of land and building improvements, net of closing costs, was $21.8 million for the three months ended October 31, 2015 and was $15.6 million during the same period a year ago.

Provisions for income taxes.

	Three Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Provisions for income taxes	$	(68,548	)	$	(17,075	)	$	(51,473	)
Effective tax rate	158		%	(78		)%

We reported a tax provision of $68.5 million on a pretax income of $43.4 million, which resulted in an effective tax rate of 158 percent for the three months ended October 31, 2015. We had a tax provision due to income taxes in profitable jurisdictions outside of the United States and the current tax expense in the United States. We had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock.

The U.S. Tax Court (“Tax Court”) recently issued an opinion favorable to Altera Corporation (“Altera”) with respect to Altera’s litigation with the Internal Revenue Service (“IRS”) related to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement with Altera's foreign subsidiary. As a result of this opinion, during the three months ended October 31, 2015, we amended our inter-company cost-sharing arrangement to exclude stock-based compensation expense beginning in fiscal 2016 and accordingly, we recognized the related tax impact through our quarterly tax provision.  

We recorded a tax provision of $17.1 million with a pretax loss of $21.8 million, which resulted in a negative effective tax rate of 78 percent for the three months ended October 31, 2014. We recorded a tax provision primarily due to income taxes in profitable jurisdictions outside of the U.S.

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Nine Months Ended October 31, 2015 and 2014

Revenues.

	Nine Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars		Percent
Subscription and support	$	4,522,939	$	3,668,406	$	854,533	23%
Professional services and other	334,879		260,572		74,307		29%
Total revenues	$	4,857,818	$	3,928,978	$	928,840	24%

Total revenues were $4.9 billion for the nine months ended October 31, 2015, compared to $3.9 billion during the same period a year ago, an increase of $0.9 billion, or 24 percent. Subscription and support revenues were $4.5 billion, or 93 percent of total revenues, for the nine months ended October 31, 2015, compared to $3.7 billion, or 93 percent of total revenues, during the same period a year ago, an increase of $854.5 million, or 23 percent. The increase in subscription and support revenues was primarily caused by volume-driven increases from new business, which includes new customers, upgrades and additional subscriptions from existing customers. We continue to invest in a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped reduce our attrition rate. The net price per user per month for our three primary offerings, Professional Edition, Enterprise Edition and Unlimited Edition, varies from period to period, but has remained within a consistent range over the past eight quarters. Changes in the net price per user per month has not been a significant driver of revenue growth for the periods presented. Professional services and other revenues were $334.9 million, or seven percent of total revenues, for the nine months ended October 31, 2015, compared to $260.6 million, or seven percent of total revenues, for the same period a year ago, an increase of $74.3 million, or 29 percent. The increase in professional services and other revenues was due primarily to the higher demand for services from an increased number of customers.

Revenues in Europe and Asia Pacific accounted for $1.3 billion, or 26 percent of total revenues, for the nine months ended October 31, 2015, compared to $1.1 billion, or 28 percent of total revenues, during the same period a year ago, an increase of $166.1 million, or 15 percent. The increase in revenues outside of the Americas was the result of the increasing acceptance of our service, our focus on marketing our services internationally and additional resources. Revenues outside of the Americas increased on a total dollar basis in the nine months ended October 31, 2015 despite an overall strengthening of the U.S. dollar, which reduced aggregate international revenues by $139.6 million compared to the same period a year ago. We expect revenues outside of the Americas to continue to be negatively impacted in the remainder of fiscal 2016 by the strengthening of the U.S. dollar relative to the Euro, Japanese yen, Australian dollar and British pound in comparison to similar periods in the prior year.

Cost of Revenues.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Subscription and support	$	870,023		$	666,611		$	203,412
Professional services and other	340,846			266,736			74,110
Total cost of revenues	$	1,210,869		$	933,347		$	277,522
Percent of total revenues	25		%	24		%

Cost of revenues was $1.2 billion, or 25 percent of total revenues, for the nine months ended October 31, 2015, compared to $933.3 million, or 24 percent of total revenues, during the same period a year ago, an increase of $277.5 million. The increase in absolute dollars was primarily due to an increase of $86.8 million in employee-related costs, an increase of $10.3 million in stock-based expenses, an increase of $107.7 million in service delivery costs, primarily due to our efforts to increase data center capacity, an increase of $34.7 million in professional and outside services and third party expenses, an increase of $25.7 million in depreciation and amortization expenses, which includes a decrease of $9.5 million in amortization of purchased intangible assets, and an increase in allocated overhead. We have increased our headcount by 37 percent since October 31, 2014 to meet the higher demand for services from our customers. We intend to continue to invest additional resources in our enterprise cloud computing services and data center capacity. We also plan to add additional employees in our professional services group to facilitate the adoption of our services. The timing of these expenses will affect our cost of revenues, both in terms of absolute dollars and as a percentage of revenues in future periods.

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The cost of professional services and other revenues was higher than the related revenue during the nine months ended October 31, 2015 by $6.0 million as compared to $6.2 million during the same period a year ago. We expect the cost of professional services to continue to be more than revenue from professional services in future fiscal quarters. We believe that this investment in professional services facilitates the adoption of our service offerings.

Research and Development.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Research and development	$	695,440		$	586,927		$	108,513
Percent of total revenues	14		%	15		%

Research and development expenses were $695.4 million, or 14 percent of total revenues, for the nine months ended October 31, 2015, compared to $586.9 million, or 15 percent of total revenues, during the same period a year ago, an increase of $108.5 million. The increase in absolute dollars was primarily due to an increase of approximately $82.4 million in employee-related costs, an increase of $9.2 million in stock-based expenses, an increase of $12.8 million in our development and test data center, and increases in allocated overhead. We increased our research and development headcount by 16 percent since October 31, 2014 in order to improve and extend our service offerings and develop new technologies. We expect that research and development expenses will increase in absolute dollars and may increase as a percentage of revenues in future periods as we continue to invest in additional employees and technology to support the development of new, and improve existing, technologies and the integration of acquired technologies.

Marketing and Sales.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Marketing and sales	$	2,349,449		$	2,020,956		$	328,493
Percent of total revenues	49		%	51		%

Marketing and sales expenses were $2.3 billion, or 49 percent of total revenues, for the nine months ended October 31, 2015, compared to $2.0 billion, or 51 percent of total revenues, during the same period a year ago, an increase of $328.5 million. The increase was primarily due to increases of $198.5 million in employee-related costs, including travel and entertainment and amortization of deferred commissions, $1.3 million in stock-based expenses, $80.4 million in advertising expenses, $13.3 million related to the amortization of purchased intangible assets and $28.3 million in allocated overhead. Our marketing and sales headcount increased by 20 percent since October 31, 2014. The increase in headcount was primarily attributable to hiring additional sales personnel to focus on adding new customers and increasing penetration within our existing customer base.

General and Administrative.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
General and administrative	$	544,314		$	498,565		$	45,749
Percent of total revenues	11		%	13		%

General and administrative expenses were $544.3 million, or 11 percent of total revenues, for the nine months ended October 31, 2015, compared to $498.6 million, or 13 percent of total revenues, during the same period a year ago, an increase of $45.7 million. The increase was primarily due to an increase of $26.9 million in employee-related costs, $12.9 million in professional services, and an increase of $0.8 million in stock-based expenses. Our general and administrative headcount increased by 12 percent since October 31, 2014 as we added personnel to support our growth.

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

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Operating lease termination resulting from purchase of 50 Fremont, net	$	(36,617	)	$	0		$	(36,617	)
Percent of total revenues	(1		)%	0		%

Operating lease termination resulting from purchase of 50 Fremont, net for the nine months ended October 31, 2015 was $36.6 million. In connection with the purchase, we recognized a net non-cash gain totaling approximately $36.6 million on the termination of the lease signed in January 2012.

Income (loss) from operations.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Income (loss) from operations	$	94,363		$	(110,817	)	$	205,180
Percent of total revenues	2		%	(3		)%

Income (loss) from operations for the nine months ended October 31, 2015 was $94.4 million and included a gain of $36.6 million related to the purchase of 50 Fremont, $434.7 million of stock-based expenses and $118.8 million of amortization of purchased intangibles. During the same period a year ago, loss from operations was $110.8 million and included $413.0 million of stock-based expenses and $115.0 million of amortization of purchased intangibles. The increase in income from operations is primarily due to a higher revenue growth rate compared to the operating expense growth rate.

Investment income.

	Nine Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars
Investment income	$	11,351	$	7,055	$	4,296

Investment income consists of income on our cash and marketable securities balances. Investment income was $11.4 million for the nine months ended October 31, 2015 and was $7.1 million during the same period a year ago. The increase was primarily due to earnings on higher cash and marketable securities balances and realized gains on sales of marketable securities.

Interest expense.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Interest expense	$	(53,020	)	$	(56,355	)	$	3,335
Percent of total revenues	(1		)%	(1		)%

Interest expense consists of interest on our convertible senior notes, capital leases, term loan and revolving credit facility. Interest expense, net of interest costs capitalized, was $53.0 million for the nine months ended October 31, 2015 and was $56.4 million during the same period a year ago. The decrease in interest expense was due to the pay down of our revolver with an offset in interest due on our loan assumed on 50 Fremont as well as interest expense associated with our financing obligation related to 350 Mission.

Other expense.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Other expense	$	(6,064	)	$	(15,095	)	$	9,031

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Other income (expense) primarily consists of foreign currency transaction gains and losses, costs associated with real estate transactions and losses on derecognition of debt. Other expense decreased primarily due to the loss of approximately $10.2 million recognized as a result of conversions of our convertible 0.75% senior notes during the nine months ended October 31, 2014.

Gain on sales of land and building improvements.

	Nine Months Ended October 31,				Variance
(in thousands)	2015		2014		Dollars
Gain on sales of land and building improvements	21,792		15,625		6,167
Percent of total revenues	1	%	0	%

Gain on sales of land and building improvements consists of the gain the company recognized from sales of undeveloped real estate and a portion of associated perpetual parking rights in San Francisco, California. Gain on sales of land and building improvements, net of closing costs, was $21.8 million for the nine months ended October 31, 2015 and was $15.6 million during the same period a year ago.

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Provisions for income taxes.

	Nine Months Ended October 31,						Variance
(in thousands)	2015			2014			Dollars
Provisions for income taxes	$	(90,339	)	$	(37,336	)	$	(53,003	)
Effective tax rate	132		%	(23		)%

We recognized a tax provision of $90.3 million on a pretax income of $68.4 million, which resulted in an effective tax rate of 132 percent for the nine months ended October 31, 2015. We had a tax provision primarily due to income taxes in profitable jurisdictions outside the United States and the current tax expense in the United States. We had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock.

The Tax Court recently issued an opinion favorable to Altera with respect to Altera’s litigation with the IRS related to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement with Altera's foreign subsidiary. As a result of this opinion, during the nine months ended October 31, 2015, we amended our inter-company cost-sharing arrangement to exclude stock-based compensation expense beginning in fiscal 2016 and accordingly, we recognized the related tax impact through our year-to-date tax provision.  

We recorded a tax provision of $37.3 million with a pretax loss of $159.6 million, which resulted in a negative effective tax rate of 23 percent for the nine months ended October 31, 2014. The tax provision recorded was primarily due to income taxes in profitable jurisdictions outside the United States.

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Liquidity and Capital Resources

At October 31, 2015, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $2.3 billion and accounts receivable of $1.1 billion.

Net cash provided by operating activities was $1.2 billion during the nine months ended October 31, 2015 and $841.5 million during the same period a year ago. Cash provided by operating activities has historically been affected by the amount of net loss adjusted for non-cash expense items such as depreciation and amortization, amortization of purchased intangibles from business combinations, amortization of debt discount, discrete items such as the non-cash gain from the termination of 50 Fremont lease, net, and the sale of land and building, and the expense associated with stock-based awards; the reclassification of excess tax benefits from the employee stock plans to cash flows from financing activities; the timing of employee related costs including commissions and bonus payments; the timing of collections from our customers, which is our largest source of operating cash flows; and changes in working capital accounts.

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

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

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

Our operating cash flow can significantly fluctuate quarter to quarter due to the excess tax benefits from employee stock plans. The excess tax benefits from employee stock plans is a reclassification between the operating cash flow and the cash flows from financing activities. The excess tax benefit amount, which relates to the exercising and vesting of stock-based awards, is dependent on taxable income by tax jurisdiction. Because taxable income is inherently difficult to forecast, for items such as temporary differences and timing of employee stock option exercises, our operating cash flow results may vary from quarter to quarter due to the reclassification.

Net cash provided by operating activities during the nine months ended October 31, 2015 increased $311.7 million over the same period a year ago primarily due to higher collections from our accounts receivable due to our sales growth, higher amortized commission, and higher net income after adjusting for depreciation and amortization, discrete items such as the gain on office lease termination and loss on conversions of convertible senior notes, gain on land sale, stock-based expenses, abandonment of leasehold improvements, and the timing of payments against accounts payable, accrued expenses and other current liabilities.

Net cash used in investing activities was $882.6 million during the nine months ended October 31, 2015 and $553.1 million during the same period a year ago. The net cash used in investing activities during the nine months ended October 31, 2015 primarily related to the purchase of 50 Fremont, strategic investments and capital expenditures including new office build-outs and investment of cash balances offset by proceeds from sales of land and building improvements of $127.1 million as well as sales and maturities of marketable securities.

Net cash provided by financing activities was $47.7 million during the nine months ended October 31, 2015 as compared to net cash used in financing activities of $206.2 million during the same period a year ago. Net cash provided by financing activities during the nine months ended October 31, 2015 consisted primarily of $48.7 million excess tax benefits compared with $3.4 million during the same period last year, $68.8 million of principal payments on capital leases, and $300.0 million of payments on our revolving credit facility, offset by $367.8 million from proceeds from equity plans.

In March 2013, we issued $1.15 billion of 0.25% convertible senior notes due in April 2018 (the “Notes”) and concurrently entered into convertible notes hedges (the “0.25% Note Hedges”) and separate warrant transactions (the

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“Warrants”). The Notes will mature in April 2018, unless earlier converted. Upon conversion of any Notes, we will deliver cash up to the principal amount of the Notes and, with respect to any excess conversion value greater than the principal amount of the Notes, shares of our common stock, cash, or a combination of both.

The Notes will be convertible if during any 20 trading days during the 30 consecutive trading days of any fiscal quarter, our common stock trades at a price exceeding 130% of the conversion price of $66.44 per share applicable to the Notes, in certain situations, when the trading price of the Notes is less than 98% of the product of the sale price of the Company’s common stock and the conversion rate, upon the occurrence of specified corporate transactions described under the indenture for the Notes, such as a consolidation, merger or binding share exchange, or at any time on or after the convertible date, January 1, 2018.

The Notes have not yet been convertible at the holders’ option. The Notes are classified as a noncurrent liability on our condensed consolidated balance sheet as of October 31, 2015. Our common stock did not trade at a price exceeding 130% of the conversion price of $66.44 per share applicable to the Notes during the fiscal quarter ended October 31, 2015. Accordingly, the Notes will not be convertible at the holders’ option for the quarter ending January 31, 2016, and therefore will remain classified as a noncurrent liability on our condensed consolidated balance sheets as of October 31, 2015.

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

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on our ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on our activities each defined specifically in the Credit Agreement. We were in compliance with the Credit Agreement’s covenants as of October 31, 2015.

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

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

The total purchase price for 50 Fremont was $637.6 million. In financing the purchase price, we used $115.0 million of restricted cash on hand and assumed a $200.0 million loan secured by the property with the remainder paid in cash. For the three and nine months ended October 31, 2015, total interest expense we recognized was $1.9 million and $5.4 million respectively.

During the nine months ended October 31, 2015, we acquired several companies for total consideration of $60.1 million.

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

As of October 31, 2015, we have a total of $70.4 million in letters of credit outstanding in favor of certain landlords for office space. To date, no amounts have been drawn against the letters of credit, which renew annually and expire at various dates through December 2030.

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

Our principal commitments consist of obligations under leases for office space, co-location data center facilities, and our development and test data center, as well as leases for computer equipment, software, furniture and fixtures. At October 31, 2015, the future non-cancelable minimum payments under these commitments were as follows (in thousands):

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	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility
Fiscal Period:
Remaining three months of fiscal 2016	$	16,437		$	87,285	$	1,434
Fiscal 2017	116,792			347,232		16,877
Fiscal 2018	121,012			311,403		21,107
Fiscal 2019	114,085			241,180		21,551
Fiscal 2020	201,507			213,419		21,995
Thereafter	0			1,344,224		252,517
Total minimum lease payments	569,833			$	2,544,743	$	335,481
Less: amount representing interest	(61,973		)
Present value of capital lease obligations	$	507,860

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

The financing obligation above represents the total obligation for our lease of approximately 445,000 rentable square feet of office space in San Francisco, California. As of October 31, 2015, $206.3 million of the total obligation noted above was recorded to Financing obligation, building in progress - leased facility, which the current portion is included in "Accounts payable, accrued expenses, and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the condensed consolidated balance sheets.

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

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

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

New Accounting Pronouncements

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

In May 2013, FASB issued Accounting Standards Update No. 2013-270, “a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)” (“ASU 2013-270”), to place leases on lessee’s balance sheets. ASU 2013-270 states a lessee would recognize a lease liability for lease payments and recognize an asset for its right to use the leased asset during the lease term. In November 2015, FASB set an effective date for annual periods after December 2018. We plan to adopt ASU 2013-270 in fiscal 2020 and we are currently evaluating the impact to our condensed consolidated financial statements.

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In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”) which eliminates the requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. We are evaluating the impact of the adoption of ASU 2015-16 on its condensed consolidated financial statements.

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Non-GAAP Financial Measures for Statement of Operations and Sharecount Information

Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP net income, non-GAAP gross profit, non-GAAP operating profit, non-GAAP free cash flow, and non-GAAP earnings per share each meet the definition of a non-GAAP financial measure. We use the above non-GAAP financial measures to provide an additional view of operational performance by excluding expenses and benefits that are not directly related to performance in any particular period. In addition to our GAAP measures, we use these non-GAAP measures when planning, monitoring, and evaluating our performance. We believe that these non-GAAP measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business, as they exclude certain expenses and benefits. These items are excluded because the decisions which gave rise to them are not made to increase revenue in a particular period, but are made for our long-term benefit over multiple periods and we are not able to change or affect these items in any particular period.

Non-GAAP net income

We define non-GAAP net income as our total net income excluding the components described below, which we believe are not reflective of our core, ongoing operating results. In each case, for the reasons set forth below, we believe that excluding the component provides useful information to investors and others in understanding and evaluating the impact of certain items to our operating results and future prospects in the same manner as we do, in comparing financial results across accounting periods and to those of peer companies and in better understanding the impact of these items on our gross margin and operating performance.

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

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

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

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

• Gain on Sales of Land and Building Improvements. The Company views the non-operating gains associated with the sales of the land and building improvements at Mission Bay to be a discrete item. The difference between the cash proceeds received and the carrying value of the land and the building improvements as of the settlement date is recorded as a one-time gain on the statement of operations. Management believes that the exclusion of the gains provides investors an enhanced view of the Company’s operational performance.

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

• Income Tax Effects and Adjustments. During fiscal 2015, the Company began to compute and utilize a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of non-recurring and period-specific items such as changes in the tax valuation allowance and tax effects of acquisitions-related costs, since each of these can vary in size and frequency. When projecting this long-term rate, the company evaluated a three-year financial projection that excludes the direct impact of the following items: stock-based expenses, amortization of purchased intangibles, amortization of acquired leases, amortization of debt discount, gains/losses on the sales of land and building improvements, gains/losses on conversions of debt, and termination of office leases. The projected rate also assumes no new acquisitions in the three-year period, and takes into account other factors including the Company’s current tax structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where the company operates. This long-term rate could be subject to change for a variety of reasons, such as significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the company operates. The Company re-evaluates this long-term rate on an annual basis unless a significant event may materially affect it. As a result of the recent Tax Court opinion in Altera Corporation’s litigation with the IRS, the Company revised its fiscal 2016 non-GAAP tax rate from 36.5 percent to 35.5 percent during the quarter ended October 31, 2015 to account for the related tax impact. The year-to-date tax impact was fully recognized in the Company’s tax provision for the quarter ended October 31, 2015.

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

Non-GAAP gross profit

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

Non-GAAP operating profit

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

Non-GAAP earnings per share

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

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

Non-GAAP free cash flow

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

Limitations on the use of non-GAAP financial measures

A limitation of our non-GAAP financial measures of non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income, non-GAAP earnings per share and non-GAAP free cash flow is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-GAAP measures of non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income, non-GAAP earnings per share and non-GAAP free cash flow should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based

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expense, if we did not pay a portion of compensation in the form of stock-based expense, the cash salary expense included in costs of revenues and operating expenses would be higher which would affect our cash position.

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

Our reconciliation of the non-GAAP financial measures to the most comparable GAAP measures for the three and nine months ended October 31, 2015 are as follows (in thousands, except for share numbers):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Gross profit
GAAP gross profit	$	1,288,284	$	1,050,444	$	3,646,949	$	2,995,631
Plus:
Amortization of purchased intangibles	20,296		20,351		60,825		70,294
Stock-based expense	17,516		14,118		49,237		38,905
Non-GAAP gross profit	$	1,326,096	$	1,084,913	$	3,757,011	$	3,104,830

	Three Months Ended October 31,					Nine Months Ended October 31,
	2015		2014			2015			2014
Income from operations
GAAP income (loss) from operations	$	43,434	$	(22,042	)	$	94,363		$	(110,817	)
Plus:
Amortization of purchased intangibles	39,262		35,446			118,820			115,002
Stock-based expense	144,317		139,460			434,656			412,963
Less:
Operating lease termination resulting from purchase of 50 Fremont, net	0		0			(36,617		)	0
Non-GAAP income from operations	$	227,013	$	152,864		$	611,222		$	417,148

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Net income
GAAP net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Plus:
Amortization of purchased intangibles	39,262			35,446			118,820			115,002
Amortization of acquired lease intangible	761			0			2,877			0
Stock-based expense	144,317			139,460			434,656			412,963
Amortization of debt discount, net	6,148			8,638			18,317			28,838
Loss on conversion of debt	0			1,339			0			10,229
Less:
Gain on sales of land and building improvements	(21,792		)	(15,625		)	(21,792		)	(15,625		)
Operating lease termination resulting from purchase of 50 Fremont, net	0			0			(36,617		)	0
Income tax effects and adjustments	(3,016		)	(36,729		)	(117,223		)	(105,678		)
Non-GAAP net income	$	140,523		$	93,605		$	377,121		$	248,806

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	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Non-GAAP diluted earnings per share
GAAP diluted loss per share (a)	$	(0.04	)	$	(0.06	)	$	(0.03	)	$	(0.32	)
Plus:
Amortization of purchased intangibles	0.06			0.05			0.18			0.18
Amortization of acquired lease intangible	0.00			0.00			0.00			0.00
Stock-based expenses	0.21			0.21			0.65			0.63
Amortization of debt discount, net	0.01			0.01			0.03			0.04
Loss on conversion of debt	0.00			0.00			0.00			0.02
Less:
Gain on sales of land and building improvements	(0.03		)	(0.02		)	(0.03		)	(0.02		)
Operating lease termination resulting from purchase of 50 Fremont, net	0.00			0.00			(0.05		)	0.00
Income tax effects and adjustments of Non-GAAP items	0.00			(0.05		)	(0.19		)	(0.15		)
Non-GAAP diluted earnings per share	$	0.21		$	0.14		$	0.56		$	0.38
Shares used in computing diluted net income per share	677,730			658,538			672,336			652,276

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

Non-GAAP net income for the quarter ended October 31, 2015 was $140.5 million and $93.6 million for the same period a year ago, an increase of $46.9 million or 50 percent. During fiscal 2016 we remained focused on improving non-GAAP operating income and expect to remain similarly focused for the remaining three months of fiscal 2016.

The effects of dilutive securities were not included in the GAAP calculation of diluted earnings/loss per share for the three and nine months ended October 31, 2015 because we had a net loss for the period and the effect would have been anti-dilutive. The following table reflects the effect of the dilutive securities on the basic share count used in the GAAP earnings/loss per share calculation to derive the share count used for the non-GAAP diluted earnings per share:

	Three Months Ended October 31,		Nine Months Ended October 31,
Supplemental Diluted Sharecount Information (in thousands):	2015	2014	2015	2014
Weighted-average shares outstanding for GAAP basic earnings per share	664,131	629,548	659,160	619,748
Effect of dilutive securities (1):
Convertible senior notes (2)	1,437	5,333	964	7,175
Warrants associated with the convertible senior note hedges (2)	0	12,857	0	12,714
Employee stock awards	12,162	10,800	12,212	12,639
Adjusted weighted-average shares outstanding and assumed conversions for Non-GAAP diluted earnings per share	677,730	658,538	672,336	652,276

(1) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and nine months ended October 31, 2015 and 2014 because the effect would have been anti-dilutive.

(2) Upon maturity in fiscal 2015, the convertible 0.75% senior notes and associated warrants were settled. The 0.25% senior notes were not convertible, however, there is a dilutive effect for shares outstanding for the three and nine months ended October 31, 2015 and 2014.

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	Three Months Ended October 31,						Nine Months Ended October 31,
Free cash flow analysis	2015			2014			2015			2014
Operating cash flow
GAAP net cash provided by operating activities	$	117,907		$	122,511		$	1,153,175		$	841,491
Less:
Capital expenditures	(80,041		)	(73,426		)	(216,011		)	(205,100		)
Free cash flow	$	37,866		$	49,085		$	937,164		$	636,391

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

We primarily conduct our business in the following locations: the United States, Europe, Canada, Asia Pacific and Japan. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, additional headcount in foreign countries, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar and Japanese Yen against the United States Dollar. These exposures may change over time as business practices evolve and economic conditions change. Changes in foreign currency exchange rates could have an adverse impact on our financial results and cash flows. For example, revenue for the third quarter of fiscal 2016 was $1.71 billion, an increase of 24 percent year over year, and 27 percent in constant currency. Deferred revenue on the balance sheet as of October 31, 2015 was $2.85 billion, an increase of 28 percent year over year, and 30 percent in constant currency.

Foreign Currency Transaction Risk

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

We pursue our objective by utilizing foreign currency forward contracts to offset foreign exchange risk. Our foreign currency forward contracts are generally short-term in duration. We neither use these foreign currency forward contracts for trading purposes nor do we currently designate these forward contracts as hedging instruments pursuant to Accounting Standards Codification 815 (“ASC 815”), Derivatives and Hedging. Accordingly, we record the fair values of these contracts as of the end of our reporting period to our consolidated balance sheet with changes in fair values recorded to our consolidated statement of operations. Given the short duration of the forward contracts, the amount recorded is not significant. Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross-currency transactions that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized gain or loss on our foreign currency forward contracts and other factors.

Foreign Currency Translation Risk

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

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $2.3 billion at October 31, 2015. This amount was invested primarily in money market funds, time deposits, corporate notes and bonds, government securities and other debt securities with credit ratings of at least BBB or better. The cash, cash equivalents and short-term marketable securities are held for general corporate purposes including possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and capital expenditures. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that

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decline in market value due to changes in interest rates. However because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. Our fixed-income portfolio is subject to interest rate risk.

An immediate increase or decrease in interest rates of 100-basis points at October 31, 2015 could result in a $13.8 million market value reduction or increase of the same amount. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.

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

Market Risk and Market Interest Risk

In March 2013, we issued at par value $1.15 billion of 0.25% convertible senior notes (the “Notes”) due April 1, 2018. Holders of the Notes may convert the Notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, we would pay the holder an amount of cash equal to the principal amounts of the Notes. The amounts in excess of the principal amounts, if any, may be paid in cash or stock at our option. Concurrent with the issuance of the Notes, we entered into separate note hedging transactions and the sale of warrants. These separate transactions were completed to reduce the potential economic dilution from the conversion of the Notes.

The Notes have a fixed annual interest rate of 0.25%, and therefore we do not have economic interest rate exposure on the Notes. However, the value of the Notes are exposed to interest rate risk. Generally, the fair values of our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of our 0.25% Notes is affected by our stock price. The principal balance of our Notes was $1.15 billion as of October 31, 2015. The total estimated fair value of our Notes at October 31, 2015 was $1.5 billion. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the third quarter of fiscal 2016, which was $129.84.

In October 2014, we entered into a credit agreement (the “Credit Agreement”) which provides for a $650.0 million unsecured revolving credit facility that matures in October 2019 (the “Credit Facility”). Borrowings under the Credit Facility bear interest, at our option, at either a base rate formula, as defined in the Credit Agreement, or a LIBOR based formula, each as set forth in the Credit Agreement. Additionally, we are obligated to pay an ongoing commitment fee at a rate between 0.125% and 0.25%. Interest and the commitment fees are payable in arrears quarterly. As of October 31, 2015 there was no outstanding borrowing amount under the Credit Agreement.

In February 2015, we assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan requires interest only payments with the remaining principal due at maturity. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that we were in compliance with as of October 31, 2015.

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

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

We have an investment portfolio that includes strategic investments in public and privately held companies, which range from early-stage companies to more mature companies with established revenue streams and business models. Our investments in privately held companies are primarily in preferred stock of the respective investees and therefore provide us with liquidation preferences in the event there are certain liquidation events. When our ownership interests are less than 20 percent and we do not have the ability to exert significant influence, we account for investments in non-marketable debt and equity securities of the privately held companies using the cost method of accounting. Otherwise, we account for the investments using the equity method of accounting.

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Our portfolio consists of investments in over 140 privately held companies, primarily comprised of independent software vendors and system integrators. We invest in early-to-late stage enterprise cloud companies for strategic reasons and to support key business initiatives to grow our ecosystem of partners and accelerate the adoption of cloud technologies. We invest in both domestic and international companies and currently hold investments in all of our regions: the Americas, Europe, and Asia Pacific. Our investments in these companies range from $0.2 million to over $70.0 million, with 13 investments individually equal to or in excess of $10 million. As of October 31, 2015 and January 31, 2015 the carrying value of our investments in privately held companies was $470.8 million and $158.0 million, respectively. The estimated fair value of our investments in privately held companies was $654.0 million and $280.0 million as of October 31, 2015 and January 31, 2015, respectively. The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition or other favorable market event reflecting appreciation to the cost of our initial investment. If we determine that any of our investments in such companies have experienced a decline in fair value, we may be required to record an impairment that is other than temporary, which could be material. We have in the past written off the full value of specific investments. Similar situations could occur in the future and negatively impact our financial results. All of our investments are subject to a risk of total loss of investment capital.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

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

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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

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

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

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

In July 2015, we and certain of our current and former directors were named as defendants in a purported shareholder derivative action in the Superior Court for the State of California, County of San Francisco. The plaintiff filed an amended version of this derivative complaint in November 2015. The derivative complaint alleges that excessive compensation was paid to such directors for their service. The derivative complaint includes allegations of breach of fiduciary duty and unjust enrichment and seeks restitution and disgorgement of a portion of the directors' compensation, as well as reform of a Company equity plan. Because the complaint is derivative in nature, it does not seek monetary damages from us.

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

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

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

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

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

ITEM 1A. RISK FACTORS

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

Risks Related to Our Business and Industry

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

Because our services are complex and incorporate a variety of hardware and proprietary and third-party software, our services may have errors or defects that could result in unanticipated downtime for our subscribers and harm to our reputation and our business. Cloud services frequently contain undetected errors when first introduced or when new versions or enhancements are released. We have from time to time found defects in our services and new errors in our services may be detected in the future. In addition, our customers may use our services in unanticipated ways that may cause a disruption in services for other customers attempting to access their data. As we acquire companies, we may encounter difficulty in incorporating the acquired technologies into our services and maintaining the quality standards that are consistent with our

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brand and reputation. Since our customers use our services for important aspects of their business, any errors, defects, disruptions in service or other performance problems could hurt our reputation and may damage our customers’ businesses. As a result, customers could elect to not renew our services or delay or withhold payment to us. We could also lose future sales or customers may make warranty or other claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.

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

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

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

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

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

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

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

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

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

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

•diversion of financial and managerial resources from existing operations;

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

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

• potential loss of key employees of the acquired company;

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

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

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

• potential unknown liabilities associated with the acquired businesses;

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

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

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

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

• challenges caused by distance, language and cultural differences;

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

• the tax effects of any such acquisitions.

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

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

Regulation related to the provision of services on the Internet is increasing, as federal, state and foreign governments continue to adopt new laws and regulations addressing data privacy and the collection, processing, storage and use of personal information. In some cases, foreign data privacy laws and regulations, such as the European Union’s Data Protection Directive, and the country-specific laws and regulations that implement that directive, also govern the processing of personal information. Further, laws are increasingly aimed at the use of personal information for marketing purposes, such as the European Union’s e-Privacy Directive, and the country-specific regulations that implement that directive. Such laws and regulations are subject to new and differing interpretations and may be inconsistent among jurisdictions.  These and other requirements could reduce demand for our services or restrict our ability to store and process data or, in some cases, impact our ability to offer our services in certain locations or our customers' ability to deploy our solutions globally. For example, the European Court of Justice recently invalidated the U.S.-EU Safe Harbor framework that had been in place since 2000, which allowed companies to meet certain European legal requirements for the transfer of personal data from the European Economic Area to the United States. While other adequate legal mechanisms to lawfully transfer such data remain, the invalidation of the U.S.-EU Safe Harbor framework may result in different European data protection regulators applying differing standards for the transfer of personal data, which could result in increased regulation, cost of compliance and limitations on data transfer for Salesforce and its customers. The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our services, reduce overall demand for our services, lead to significant fines, penalties or liabilities for noncompliance, or slow the pace at which we close sales transactions, any of which could harm our business.

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

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

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

Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare and telecommunications. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect, such as an attestation of compliance with the Payment Card Industry (PCI) Data Security Standards, may have an adverse impact on our business and results. Further, there are various statutes, regulations, and rulings relevant to the direct email marketing and text-messaging industries, including the Telephone Consumer Protection Act (TCPA) and related Federal Communication Commission (FCC) orders. The interpretation of many of these statutes, regulations, and rulings is evolving in the courts and administrative agencies and an inability to comply may have an adverse impact on our business and results. If in the future we are unable to achieve or maintain industry-specific certifications or other requirements or standards relevant to our customers, it may harm our business and adversely affect our results.

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

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

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

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

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

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

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

• on premise offerings from enterprise software application vendors;

• cloud computing application service providers;

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

• social media companies;

• traditional platform development environment companies;

• cloud computing development platform companies; and

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

Many of our current and potential competitors enjoy substantial competitive advantages, such as greater name recognition, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. In addition, many of our current and potential competitors have established marketing relationships and access to larger customer bases, and have major distribution agreements with consultants, system integrators and resellers. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. Furthermore, because of these advantages, even if our services are more effective than the products and services that our competitors offer, potential customers might select competitive products and services in lieu of purchasing our services. For all of these reasons, we may not be able to compete successfully against our current and future competitors.

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

Our quarterly results are likely to fluctuate. For example, our fiscal fourth quarter has historically been our strongest quarter for new business and renewals. The year-over-year compounding effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of invoices that we generate in the fourth quarter to continually increase in proportion to our billings in the other three quarters of our fiscal year. As a result, our fiscal first quarter has become our largest collections and operating cash flow quarter.

Additionally, some of the important factors that may cause our revenues, operating results and cash flows to fluctuate from quarter to quarter include:

• our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;

• the attrition rates for our services;

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

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

• changes in foreign currency exchange rates;

• the number of new employees;

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

• the cost, timing and management effort for the introduction of new features to our services;

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

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

• the length of the sales cycle for our services;

• new product and service introductions by our competitors;

• our success in selling our services to large enterprises;

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

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

• technical difficulties or interruptions in our services;

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

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

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

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• income tax effects;

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

• other than temporary impairments in the value of our strategic investments in early-to-late stage privately held companies, which could be material in a particular quarter;

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

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

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

• regulatory compliance costs;

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

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

• the impact of new accounting pronouncements;

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

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

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

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

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

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

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

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

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

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

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

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

• laws and business practices favoring local competitors;

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

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

• foreign currency fluctuations and controls;

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

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

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

• different pricing environments;

• difficulties in staffing and managing foreign operations;

• different or lesser protection of our intellectual property;

• longer accounts receivable payment cycles and other collection difficulties;

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

• regional economic and political conditions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We continue to experience significant growth in our customer base and personnel, which has placed a strain on our management, administrative, operational and financial infrastructure. We anticipate that additional investments in our internal infrastructure, data center capacity, research, customer support and development, and real estate spending will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth. The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term.

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

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Our success will depend in part upon the ability of our senior management to manage our projected growth effectively. To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed. To manage the expected domestic and international growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls, our reporting systems and procedures, and our utilization of real estate. If we fail to successfully scale our operations and increase productivity, we will be unable to execute our business plan.

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

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

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

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

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

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

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

In addition, we have been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights. For example, during fiscal 2015, we received a communication from a large technology company alleging that we infringed certain of its patents. While we continue to analyze this claim and no litigation has been filed to date, there can be no assurance that this claim will not lead to litigation in the future. Our technologies may be subject to injunction if they are found to infringe the rights of a third party or we may be required to pay damages, or both. Further, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Additionally, we may be subject to additional tax liabilities due to changes in non-income taxes resulting from changes in federal, state or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, changes to the business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period.

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

We have a high level of debt, including our 0.25% Senior Notes due April 1, 2018, the loan we assumed when we purchased 50 Fremont, and capital lease arrangements. Additionally, we have significant contractual commitments in operating lease arrangements, which are not reflected on our condensed consolidated balance sheets. In addition, we have a financing obligation for a leased facility of which we are deemed the owner for accounting purposes. Our maintenance of this indebtedness could:

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

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

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

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

Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions and governmental regulations. Further, our operations may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on our debt, we could be in default on such debt. If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt

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to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we would be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

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

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

Our overall performance depends in part on worldwide economic conditions. The United States and other key international economies have experienced cyclical downturns from time to time in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. These conditions affect the rate of information technology spending and could adversely affect our customers’ ability or willingness to purchase our enterprise cloud computing services, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscription contracts, or affect attrition rates, all of which could adversely affect our operating results.

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

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

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Risks Relating to Our Convertible Senior Notes and Our Common Stock

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

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

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

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

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

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

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

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

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

• recruitment or departure of key personnel;

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

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

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

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

• issuance of debt or other convertible securities.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On September 14, 2015, the Company issued 92,859 shares of Company common stock in connection with the acquisition of a professional services and consulting company, in a private transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) under Securities Act.

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

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
August 1 to 31, 2015	0	$	0	0	0
September 1 to 30, 2015	0	$	0	0	0
October 1 to 31, 2015	9,351	$	5.00	0	0
Total	9,351	$	5.00	0

____________________

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

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

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

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

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SIGNATURES

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

Dated: November 20, 2015
	salesforce.com, inc.
	By:	/S/    MARK J. HAWKINS
		Mark J. Hawkins
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: November 20, 2015
	salesforce.com, inc.
	By:	/S/    JOE ALLANSON
		Joe Allanson
		Executive Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

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Index to Exhibits

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

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EX-10.1

AMENDMENT TO ADD THE MODEL CLAUSES DATA PROCESSING ADDENDUM

Signature Page

Reseller Full Legal Name Salesforce.org, a nonprofit public benefit corporation having its principal place of business at 50 Fremont Street, Suite 300, San Francisco, California 94105

This Amendment (this “Amendment”) is made and entered in by and between salesforce.com, inc., a Delaware corporation having its principal place of business at The Landmark @ One Market, Suite 300, San Francisco, California 94105 (“SFDC” or “Salesforce”) and the Reseller named above and amends that certain Reseller Agreement between Salesforce and Reseller dated as of August 1, 2015, as previously amended (the “Agreement”). This Amendment is effective as of the later of the dates beneath the Parties’ signatures below (“Amendment Effective Date”), provided, however, that the dates of the Parties’ signatures are not separated by a period of time greater than ten (10) business days. If such period is greater than ten (10) business days then this Amendment shall be deemed null and void and to be of no effect. Capitalized terms not defined herein shall have the meanings given to them in the Agreement.

The Parties, by their respective authorized signatories, have duly executed this Amendment as of the Amendment Effective Date.

Salesforce.com, Inc. Reseller

By: /s/ Mark J. Hawkins        By: /s/ Shanti Ariker    

Name: Mark J. Hawkins        Name: Shanti Ariker    

Title: CFO        Title: VP, Global General Counsel    

Date: 10/9/2015        Date: 10/13/2015    

This Amendment consists of this Signature Page and the following Recitals and AmendmentTerms & Conditions, as well as the Model Clauses Data Processing Agreement (Reseller) attached hereto and incorporated by reference herein.

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AMENDMENT TO ADD MODEL CLAUSES DPA    Page 1 of 1

Recitals

WHEREAS, Salesforce and Reseller desire to amend the Agreement to add the attached Model Clauses Data Processing Addendum.

WHEREAS, other than as expressly modified in this Amendment, the Parties desire for the terms of the Agreement to remain unchanged and continue in full force and effect.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and in the Agreement, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

Amendment Terms & Conditions

1. New Attachment. The Model Clauses Data Processing Addendum (Reseller) attached hereto is added as new attachment to the Agreement.

2. Scope of Model Clauses Data Processing Addendum (Reseller).The Parties agree that the Model Clauses Data Processing Addendum (Reseller) applies only to the Processing of Personal Data by Salesforce in the course of providing the Resold Services. The Model Clauses Data Processing Addendum (Reseller) applies only to Personal Data that is transferred from the European Economic Area (EEA) to outside the EEA, either directly or via onward transfer, to any country or recipient: (i) not recognized by the European Commission as providing an adequate level of protection for personal data (as described in the EU Data Protection Directive), and (ii) not covered by a suitable framework recognized by the relevant authorities or courts as providing an adequate level of protection for personal data, including but not limited to Binding Corporate Rules for Processors.

3. Effect of Amendment. Subject to the above modifications, the Agreement remains in full force and effect.

4. Entire Agreement. The terms and conditions herein contained constitute the entire agreement between the Parties with respect to the subject matter of this Amendment and supersede any previous and contemporaneous agreements and understandings, whether oral or written, between the Parties hereto with respect to the subject matter hereof.

5. Counterparts. This Amendment may be executed in one or more counterparts, including facsimiles or scanned copies sent via email or otherwise, each of which will be deemed to be a duplicate original, but all of which, taken together, will be deemed to constitute a single instrument.

(End of Amendment Terms & Conditions)

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AMENDMENT TO ADD MODEL CLAUSES DPA    Page 2 of 2

MODEL CLAUSES DATA PROCESSING ADDENDUM (RESELLER)

This Model Clauses Data Processing Addendum (the “DPA” or the “Model Clauses DPA”) is made part of the Agreement between Reseller and Salesforce to reflect the Parties’ agreement with regard to the Processing of Customer Data, including Personal Data, in accordance with the requirements of Data Protection Laws and Regulations.  All capitalized terms not defined herein shall have the meaning set forth in the Agreement.

This Model Clauses DPA is between the following Parties:

(1) salesforce.com, inc., The Landmark, One Market, Suite 300, San Francisco, California 94105 USA,a company incorporated under the laws of the state of Delaware, USA (“Salesforce” or “Sub-Processor”);

AND

(2) (i) Salesforce.org, a nonprofit public benefit corporation having its principal place of business at 50 Fremont Street, Suite 300, San Francisco, California 94105, and(ii)solely for the purpose of meeting applicable requirements of Data Protection Laws, Salesforce.org EMEA Limited, (each the “Reseller” and each the “Processor” for purposes of this DPA)

This DPA shall not replace any additional rights relating to Processing of Customer Data previously negotiated by Reseller in the Agreement (including any existing data processing addendum to the Agreement).

This DPA shall apply only to Salesforce online services that Reseller is permitted to resell under the Agreement and that are branded by Salesforce as Sales Cloud, Service Cloud, Communities, Force.com and Chatter (“Resold Services”).

1 BACKGROUND

(A) Salesforce is a provider of enterprise cloud computing solutions and provides technology services to organizations (including the Pass-Through Customers).

(B) Pursuant to EU Commission Decision 2010/87/EU, Reseller and the Pass-Through Customers may have entered into a data transfer agreement based on the Standard Contractual Clauses (“Data Transfer Agreement”) under which the Pass-Through Customers, as Controller, has agreed to transfer, and Reseller, as Processor, has agreed to receive, the Pass-Through Customers Personal Data intended for processing on the Pass-Through Customers’s behalf in accordance with the Data Transfer Agreement.

(C) In accordance with Clause 11 of the Data Transfer Agreement and to safeguard the applicable Pass-Through Customers’s Personal Data (as defined below), the Parties have agreed to enter into this DPA.

(D) For clarity, this DPA only applies to Pass-Through Customers Personal Data submitted to Salesforce’s systems by or for Pass-Through Customers as Customer Data (as defined in the Agreement) while such Customer Data is resident on Salesforce’s systems. The Pass-Through Customers Personal Data transferred will be processed under this DPA by Salesforce, Salesforce’s Affiliates (as defined in Clause 8 of this DPA) and non-Salesforce Affiliate sub-processors for the duration of the Agreement.

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AMENDMENT TO ADD MODEL CLAUSES DPA    Page 3 of 3

2 DEFINITIONS AND INTERPRETATION

2.1 In this DPA the following words and phrases shall have the following meanings, unless inconsistent with the context or as otherwise specified:

“Data Protection Laws and Regulations” means the legislation protecting the fundamental rights and freedoms of individuals and, in particular, their right to privacy with respect to the processing of personal data applicable to a data controller in the Member State in which the data exporter is established.

“Personal Data”, “Special Categories of Data”, “process/processing”, “Controller”, “Processor”, “Data Subject”, and “Supervisory Authority”shall have the same meaning as in Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data;

“Pass-Through Customers”means a Pass-Through Customers as a Controller, who transfers the Pass-Through Customers Personal Data to Reseller, as Processor;

“Pass-Through Customer Personal Data”means any information relating to an identified or identifiable person where such data is submitted by or for Pass-Through Customers to Sub-Processor’s systems as Customer Data which is accessible to the Pass-Through Customers while resident on Sub-Processor’s systems.

“Salesforce Group”means Salesforce and its Affiliates engaged in the Processing of Personal Data.

“Technical and Organizational Security Measures”means those measures aimed at protecting personal data against accidental or unlawful destruction or accidental loss, alteration, unauthorized disclosure or access, in particular where the processing involves the transmission of data over a network, and against all other unlawful forms of processing.

2.2 The headings used in this DPA are used for convenience only and are not to be considered in construing or interpreting this DPA. All references in this DPA to “Clauses” or “Schedules” shall, unless otherwise provided, refer to Clauses hereof or Schedules to this DPA, respectively.

2.3 Capitalized terms not defined in this DPA shall have the meanings given to them in the Agreement.

3 DETAILS OF THE PROCESSING

3.1 The details of the processing are specified in Schedule 1, which forms an integral part of this DPA.

3.2 Application. This Model Clauses Data Processing Addendum (Reseller) applies only to the Processing of Personal Data by Salesforce in the course of providing the Resold Services. The Model Clauses Data Processing Addendum (Reseller) applies only to Personal Data that is transferred from the European Economic Area (EEA) to outside the EEA, either directly or via onward transfer, to any country or recipient: (i) not recognized by the European Commission as providing an adequate level of protection for personal data (as described in the EU Data Protection Directive), and (ii) not covered by a suitable framework recognized by the relevant authorities or courts as providing an adequate level of protection for personal data, including but not limited to Binding Corporate Rules for Processors.

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AMENDMENT TO ADD MODEL CLAUSES DPA    Page 4 of 4

4 OBLIGATIONS OF THE SUB-PROCESSOR

4.1 The Sub-Processor agrees and warrants that it will:

(i) process the Pass-Through Customers Personal Data only on behalf of the Pass-Through Customers and in compliance with Reseller’s (and/or Pass-Through Customers’s) instructions, including but not limited to the Agreement and this DPA; if it cannot provide such compliance for whatever reasons, it agrees to promptly inform Reseller of its inability to comply, in which case Reseller is entitled to suspend the processing of the Pass-Through Customers Personal Data permitted pursuant to the Agreement and/or terminate the DPA;

(ii) process Pass-Through Customers Personal Data on behalf of and in accordance with Reseller and/or Pass-Through Customers’s, as the case may be, instructions as set forth in the Agreement and this DPA. Reseller and Pass-Through Customers instruct Sub-Processor to Process Pass-Through Customers Personal Data for the following purposes: (a) processing in accordance with the Agreement and applicable Service Order(s); and (b) processing initiated by the Pass-Through Customers’s Users (as defined in the Agreement). For clarity, as set forth in the Agreement, the Sub-Processor shall not disclose Pass-Through Customers Personal Data except as expressly permitted in writing by the Pass-Through Customers (or Reseller on Pass-Through Customers’s behalf) or where required by law, in which case to the extent permitted by law, the Sub-Processor shall provide the Reseller and/or Pass-Through Customers with prior notice of any such compelled disclosure;

(iii) it has no reason to believe that the legislation applicable to it prevents it from fulfilling the instructions received from Reseller (and/or Pass-Through Customers) and its obligations under this DPA; in the event of a change in this legislation which is likely to have a substantial adverse effect on the warranties and obligations provided by this DPA, it will promptly notify the change to Reseller as soon as it is aware, in which case Reseller is entitled to suspend the processing of the Pass-Through Customers Personal Data permitted pursuant to the Agreement and/or terminate the DPA;

(iv) it has implemented the Technical and Organizational Security Measures specified in Schedule 2 before processing the Pass-Through Customers Personal Data;

(v) it will promptly notify Reseller about:

(a) any legally binding request for disclosure of the Pass-Through Customers Personal Data by a law enforcement authority or administrative or court order unless otherwise prohibited, such as a prohibition under criminal law to preserve the confidentiality of a law enforcement investigation;

(b) any accidental or unauthorized access to, or use of disclosure of the Pass-Through Customers Personal Data; and

(c) any request received directly from the Data Subjects, without responding to that request, unless it has been otherwise authorized to do so;

AND

(vi) it will deal promptly and properly with all inquiries from Reseller relating to its processing of the Pass-Through Customers Personal Data and to abide by the advice of the Supervisory

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AMENDMENT TO ADD MODEL CLAUSES DPA    Page 5 of 5

Authority in consultation with Reseller (as legally permitted), with regard to the processing of the Pass-Through Customers Personal Data.

4.2 Audit.

4.2.1 Audit Report. Sub-Processor uses external auditors to verify the adequacy of its Technical and Organizational Security Measures, including the physical security of the data centers from which Sub-Processor provides the Resold Services. This audit: (a) will be performed at least annually; (b) will be performed according to ISO 27001 standards or such other alternative standards that are substantially equivalent to ISO 27001; (c) will be performed by independent, third-party security inspection professional(s) in possession of professional qualifications and bound by a duty of confidentiality to Salesforce, at Sub-Processor’s selection and expense; (d) will result in the generation of an audit report (“Audit Report”) (e.g. in a Service Organization Controls 2 (SOC-2) report or its equivalent); and (e) may be performed for other purposes in addition to satisfying this Clause 4.2.1 (e.g. as part of Sub-Processor’s regular internal security procedures or to satisfy other contractual obligations).

At Reseller’s request, including in connection with a request from a Supervisory Authority, Sub-Processor will provide Reseller with a copy of the Audit Report signed by the third-party auditor so that Reseller can reasonably verify Sub-Processor’s compliance with the Technical and Organizational Security Measures under this DPA. The Audit Report is Confidential Information (as defined in the Agreement). Reseller may share a summary of the results of the Audit Report with a Supervisory Authority and/or Pass-Through Customers provided such summary is treated as Confidential Information.

4.2.2 On-Site Audit Right. In addition, subject to the restrictions in Clause 4.2.3 below, Sub-Processor shall allow Reseller to audit Sub-Processor, or an Salesforce Affiliate engaged in the Processing of Personal Data, for compliance with the Technical and Organizational Security Measures set forth in Schedule 2 of this DPA in the following limited circumstances:

(a) Following any notice from Sub-Processor to Reseller of an actual or reasonably suspected unauthorized disclosure of Pass-Through Customers Personal Data submitted to the Resold Services, Reseller shall have the right to conduct, with reasonable prior written notice, either itself or through a third-party independent contractor selected by Reseller at Reseller’s expense, an on-site audit of Sub-Processor’s or the applicable Salesforce Affiliate’s systems, policies and procedures relevant to the security and integrity of Pass-Through Customers Personal Data submitted to the Resold Services; and

(b) Reseller may conduct, either itself or through a third-party independent contractor selected by Reseller at Reseller’s expense, an on-site audit of Sub-Processor’s or the applicable Salesforce Affiliate’s systems, policies and procedures relevant to the security and integrity of Pass-Through Customers Personal Data submitted to the Resold Services, provided that such audit may be conducted only one time per year, with at least three week’s advance written request.

4.2.3 On-Site Audit Restrictions. The audit rights set forth in Clause 4.2.2 above are subject to the following restrictions:

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(i) Reseller must promptly provide Sub-Processor with information regarding any non-compliance discovered during the course of an audit.

(ii) Audits shall be conducted during reasonable times and shall be of reasonable duration and shall not unreasonably interfere with Sub-Processor’s day-to-day operations. In the event that Reseller conducts an audit through a third-party independent contractor, such independent contractor shall be required to enter into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Sub-Processor’s proprietary information. Additionally, such independent contractor must not be a competitor of Sub-Processor.

(iii) If an audit requires the equivalent of more than one business day of time expended by Sub-Processor or a Sub-Processor Affiliate employee, Reseller agrees to reimburse Sub-Processor for any additional time expended at Sub-Processor’s then current professional services rates. Reseller may share a summary of the results of its audit or inspection with a Pass-Through Customers, provided that prior to sharing such summary, the Pass-Through Customers has entered into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Sub-Processor’s proprietary information.

5 CONFIDENTIALITY

5.1 The Sub-Processor agrees that it shall maintain the Pass-Through Customers Personal Data in confidence. In particular, the Sub-Processor agrees that, except with the prior written consent of Reseller and/or the Pass-Through Customers, it shall not make any use of any Customer Personal Data otherwise than in connection with the provision of the Resold Services and, subject to Clause 4.1(ii), shall not disclose any Customer Personal Data to any third-party.

5.2 The Sub-Processor agrees and acknowledges that Reseller may make available a copy of this DPA to the Pass-Through Customers or the Supervisory Authority for informational purposes; however Reseller shall remove any commercial information contained in this DPA. For the avoidance of doubt, this DPA is Confidential Information (as defined in the Agreement).

5.3 The Sub-Processor further agrees and acknowledges that Reseller may make available to the Data Subject for informational purposes, on request, a copy of this DPA; however Reseller shall remove any commercial information contained in this DPA, with the exception of Schedule 2, which shall be replaced by a summary description of the security measures in those cases where the Data Subject is unable to obtain a copy from the Customer. For the avoidance of doubt, this DPA is Confidential Information (as defined in the Agreement).

6 COOPERATION WITH SUPERVISORY AUTHORITIES

6.1 The Parties agree that the Supervisory Authority has the right to conduct an audit of the Sub-Processor, which has the same scope and is subject to the same conditions as would apply to an audit of the Pass-Through Customers under the data protection laws applicable to the Pass-Through Customers.

6.2 The Sub-Processor shall promptly inform Reseller about the existence of legislation applicable to it preventing the conduct of an audit of the Sub-Processor pursuant to Clause 6.1, in which case

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Reseller may suspend the processing of the Pass-Through Customers Personal Data permitted pursuant to the Agreement and/or terminate this DPA.

7 LIABILITY AND THIRD-PARTY BENEFICIARY CLAUSE

7.1 The Data Subject can enforce against the Sub-Processor this Clause 7.1, Clause 7.2 and 7.3, Clause 4.1 (i)-(vi), Clause 5.3, Clause 6.1 Clause 8, Clause 9.2 and 9.3, Clause 10, Clause 12.2 and Clause 13 as a third party beneficiary.

7.2 If a Data Subject, who has suffered damage as a result of any breach by the Sub-Processor of any of its obligations under this DPA, is not able to bring a claim against the Pass-Through Customers or Reseller arising out of such breach because both the Pass-Through Customers and Reseller have factually disappeared or ceased to exist in law or have become insolvent, the Sub-Processor agrees that the Data Subject may issue a claim against the Sub-Processor with regard to its own processing operations under this DPA as if it were the Pass-Through Customers or Reseller (unless any successor entity has assumed the entire legal obligations of the Pass-Through Customers or Reseller by contract or by operation of law, in which case the Data Subject can enforce its rights against such entity). The liability of the Sub-Processor to the Data Subject as described in this Clause 7.2 shall be limited to its own processing operations under this DPA.

7.3 The Parties do not object to a Data Subject being represented by an association or other body if the Data Subject so expressly wishes and if permitted by national law.

8 FURTHER SUB-PROCESSORS

8.1 Pursuant to Clause 5(h) of the Data Transfer Agreement, Reseller acknowledges and expressly agrees that Sub-Processor is entitled to retain its Affiliates (“Salesforce Affiliates”) as further sub-processors for Sub-Processor and that Sub-Processor or Salesforce Affiliates respectively may engage third-party service providers as sub-processors that may provide customer support, including processing of Pass-Through Customers Personal Data, in connection with the Resold Services.

8.2 Sub-processors. Salesforce shall make available to Reseller a current list of sub-processors for the Resold Services with the identities of those Sub-processors (“Sub-processor List”). Salesforce shall provide Reseller with a mechanism to subscribe to updates to the Sub-processor List and shall provide such updates before authorizing any new Sub-processor(s) to Process Personal Data in connection with the provision of the Resold Services.

8.3 Objection Right for new Sub-processors.  If Reseller has a reasonable basis to object to Salesforce’s use of a new Sub-processor, Reseller shall notify Salesforce promptly in writing within 10 business days after receipt of Salesforce’s notice.

In the event Reseller objects to a new Sub-processor(s) and that objection is not unreasonable Salesforce will use reasonable efforts to make available to Reseller a change in the affected Resold Services or recommend a commercially reasonable change Reseller’s configuration or use of the affected Resold Services to avoid processing of Personal Data by the objected-to new Sub processor without unreasonably burdening Reseller. If Salesforce is unable to make available such change within a reasonable period of time, which shall not exceed sixty (60) days, Reseller may terminate the applicable Service Order(s) in respect only to those Resold Services which cannot be provided by Salesforce without the use of the objected-to new Sub-processor, by providing written notice

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to Reseller. Reseller shall receive a refund of any prepaid fees for the period following the effective date of termination in respect of such terminated Resold Services.

8.4 All sub-processors will be subject to data protection obligations at least equivalent to those contained in this DPA under a written agreement, and such sub-processors shall be obliged to comply with applicable Data Protection Laws and Regulations. Where the sub-processor fails to fulfil its data protection obligations under such written agreement Salesforce shall remain fully liable to the data exporter for the performance of the sub-processor's obligations under such agreement.

8.5 Sub-Processor shall audit third-party sub-processors that are not Salesforce Affiliates at least once per year to ensure they have appropriate physical, technical, organizational, and administrative controls in place. Upon Reseller’s reasonable request at reasonable intervals, Salesforce shall provide Reseller with an executive summary of the most recent audits of such third-party sub-processors. Salesforce Affiliates that are sub-processors are audited at least once per year pursuant to salesforce.com, inc.’s ISO 27001 certification.

8.6 Upon Reseller’s request, Salesforce agrees to promptly make available to Reseller a copy of an applicable sub-processor data processing agreement executed in relation to this DPA, provided that Salesforce may remove any commercial information contained in such agreement. Reseller may make available a summary of the agreement, or the agreement if required, to the Pass-Through Customers provided that such summary, or the agreement if required, is treated as Confidential Information, including that the Pass-Through Customers has entered into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Salesforce’s Confidential Information.

9 TERM AND TERMINATION

9.1 This DPA shall continue in full force and effect until the Agreement has been terminated or expires, it being understood, however, that the Sub-Processor's provision of data-processing services for the Pass-Through Customers pursuant to its obligations under the Agreement shall be terminated upon instruction of Reseller or upon termination of the processing of Pass-Through Customers Personal Data by Reseller for the Pass-Through Customers pursuant to the Data Transfer Agreement.

9.2 Upon request by Pass-Through Customers made within 30 days following termination of the provision of data-processing services for the Pass-Through Customers, the Sub-Processor will return all Pass-Through Customers Personal Data to Pass-Through Customers, unless prohibited from returning or destroying all or part of the Pass-Through Customers Personal Data by applicable law, including, but not limited to, a litigation hold, or unless otherwise required by an agreement between Pass-Through Customers and Sub-Processor. In that case the Sub-Processor warrants that it will guarantee the confidentiality of the Pass-Through Customers Personal Data and will not actively process the Pass-Through Customers Personal Data anymore except as required by applicable law or permitted by the applicable agreement between Pass-Through Customers and Sub-Processor.

The Sub-Processor shall provide such Pass-Through Customers Personal Data via a downloadable file in comma separated value (.csv) format and attachments in their native format. Pass-Through Customers Personal Data submitted to the Resold Services is retained in inactive status within the

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Resold Services for 180 days and a transition period of up to 30 days, after which it is securely overwritten or deleted. Pass-Through Customers Personal Data submitted to the Resold Services (including Pass-Through Customers Personal Data retained in inactive status) will be stored on backup media for an additional 90 days after it is securely overwritten or deleted from the Resold Services. This process is subject to applicable legal requirements. Without limiting the ability for the Pass-Through Customers to request return of its Pass-Through Customers Personal Data, the Sub-Processor reserves the right to reduce the number of days it retains such data after contract termination. Upon request, the Sub-Processor will provide Reseller with a certification of destruction as required under Clause 12.1 of the Data Transfer Agreement.

9.3 The Pass-Through Customers Personal Data is destroyed through an automated technical process. This process is audited according to Clause 4.2.

10 VARIATION

Any amendment, waiver or variation of this DPA shall not be binding on the Parties unless set out in writing, expressed to amend this DPA and signed by or on behalf of each of the Parties.

11 SEVERABILITY AND WAIVER

If any provision of this DPA is held to be illegal, invalid or otherwise unenforceable, such provision will be enforced to the extent possible consistent with the stated intention of the Parties, or if incapable of such enforcement, will be deemed to be severed and deleted from this DPA, while the remainder of this DPA will continue in full force and effect. The waiver by either Party of any default or breach of this DPA will not constitute a waiver of any other or subsequent default or breach.

12 GOVERNING LAW

12.1 Subject to Clause 12.2 below, this DPA shall be governed by, and construed in accordance with the laws of California. The state and federal Courts of the City and County of San Francisco, California shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceedings relating to or arising in connection with this DPA.

12.2 The provisions of this DPA relating to data protection aspects of processing of Pass-Through Customers Personal Data shall exclusively be governed by the law of the Member State in which the Pass-Through Customers is established.

13 MEDIATION

13.1 The Sub-Processor agrees that if the Data Subject invokes against it third-party beneficiary rights and/or claims compensation for damages under this DPA, the Sub-Processor will accept the decision of the Data Subject:

(i) to refer the dispute to mediation, by an independent person or, where applicable, by the Supervisory Authority; or

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(ii) to refer the dispute to the courts in the Member State in which the Pass-Through Customers is established.

13.2 The Parties agree that the choice made by the Data Subject will not prejudice its substantive or procedural rights to seek remedies in accordance with other provisions of national or international law.

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SCHEDULE 1

DETAILS OF THE PROCESSING

Data subjects

Pass-Through Customers Personal Data submitted to Salesforce’s systems by or for Pass-Through Customers as Customer Data which is accessible to the Pass-Through Customers while resident on Salesforce’s systems may relate (the extent of which is determined and controlled by the Customer in its sole discretion) to and may include, but is not limited, to the following examples:

• prospects, customers, business partners and vendors of Pass-Through Customers (who are natural persons)

• employees or contact persons of Pass-Through Customers's prospects, customers, business partners and vendors

• employees, agents, advisors and freelancers of Pass-Through Customers (who are natural persons)

• users of Pass-Through Customers authorized by Pass-Through Customers to use the Resold Services

Categories of data

Pass-Through Customers Personal Data submitted to Salesforce’s systems by or for Pass-Through Customers as Customer Data which is accessible to the Pass-Through Customers while resident on Salesforce’s systems may concern any or all of the categories of Personal Data, the extent of which is determined and controlled by the Pass-Through Customers in its sole discretion, and which may include, but is not limited to the following examples:

• First, middle and last name

• Title

• Position

• Employer

• Contact information (email addresses, phone numbers, physical address information)

Special Categories of Data

Pass-Through Customers may submit special categories of data to the Resold Services, the extent of which is determined and controlled by the Pass-Through Customers in its sole discretion, and which is for the sake of clarity personal data with information revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, and the processing of data concerning health or sex life.

Processing Operations

The Personal Data transferred will be subject to the following basic processing activities:

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As set forth in the Agreement, Salesforce shall process Personal Data for the following purposes: (a) to provide the Resold Services in accordance with the Agreement, to prevent or address service or technical problems, or upon Reseller and/or Pass-Through Customers’s request in connection with a customer support matter; and (b) processing initiated by Users in their use of the Resold Services.

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SCHEDULE 2

SECURITY MEASURES

Capitalized terms used in this Schedule 2 but not defined in this Schedule 2 have the meaning given in the Agreement

1. Access control to premises and facilities to prevent unauthorized persons from gaining access to data processing systems for processing or using Personal Data, Salesforce’s production data centers have an access system that controls access to the data center. This system permits only authorized personnel to have access to secure areas. The facility is secured by around-the-clock guards, biometric access screening, and escort-controlled access.

2. Access control to systems to prevent data processing systems from being used without authorization.

In providing the Resold Services, Salesforce implements the following controls:

• Unique User identifiers (User IDs) to ensure that activities can be attributed to the responsible individual.

• User passwords are stored using a one-way hashing algorithm (SHA-256) and are never transmitted unencrypted.

• Access to the Resold Services require a valid User ID and password combination, which are encrypted via SSL while in transmission. Following a successful authentication, a random session ID is generated and stored in the User’s browser to preserve and track session state.

• Controls to ensure generated initial passwords must be reset on first use.

The Resold Services provide the following functionality that may be implemented by Reseller in its use of the Resold Services:

• Controls to revoke access after several consecutive failed login attempts.

• Controls on the number of invalid login requests before locking out a User.

• Controls to force a User password to expire after a period of use.

• Controls to terminate a User session after a period of inactivity.

• Password history controls to limit password reuse.

• Password length controls

• Password complexity requirement (requires letters and numbers).

• Verification question before resetting password.

• The ability to accept logins to the Resold Services from only certain IP address ranges.

• The ability to restrict logins to the Resold Services to specific time periods (Developer Edition, Enterprise Edition, and Unlimited Edition only).

• Ability to delegate user authentication or federate authentication via SAML.

3. Access control to data to ensure that persons authorized to use a data processing system have access only to those data they are authorized to access, and that Personal Data cannot be read, copied, altered, or removed without authorization during use and after recording.

• Reseller and/or Pass-Through Customers may implement a granular sharing model and User permission profiles to limit data accessible to different Users.

• Reseller and/or Pass-Through Customers, as applicable, may create custom fields that are encrypted at rest and are only visible to Users that have been granted the “View Encrypted Data” permission by Reseller or Pass-Through Customers’s, as applicable, designated system administrators.

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4. Disclosure control to ensure that Personal Data cannot be read, copied, altered, or removed without authorization during electronic transfer or transfer or transport or while being recorded onto data storage media, and that it is possible to check and establish to which parties Personal Data are to be transferred by means of data transmission facilities.

• Salesforce uses industry accepted encryption products to protect Customer Data and communications during transmissions between Reseller and/or Pass-Through Customers’s network and the Reseller Services, including minimum 128-bit VeriSign SSL Certification and minimum 2048-bit RSA public keys.

5. Input control to ensure that it is possible to after-the-fact check and establish whether Personal Data has been entered into, altered, or removed from data processing systems, and if so, by whom.

In providing the Resold Services, Salesforce implements the following controls:

• User access log entries will be maintained, containing date, time, User ID, URL executed or entity ID operated on, operation performed (viewed, edited, etc.) and source IP address. Note that source IP address might not be available if NAT (Network Access Translation) or PAT (Port Address Translation) is used by Reseller and/or Pass-Through Customers or its ISP.

• If there is a suspicion of inappropriate access, Salesforce can provide Reseller log entry records to assist in forensic analysis. This service will be provided to Reseller on a time and materials basis.

The Resold Services provide the following functionality that may be implemented by Reseller and/or Pass-Through Customers in its use of the Resold Services:

• Certain administrative changes to the Resold Services (such as password changes and adding custom fields) are tracked in an area known as the “Setup Audit Log” and are available for viewing by Pass-Through Customers’s designated system administrator(s). Pass-Through Customers may download and store this data locally.

• Successful and failed login attempts for Pass-Through Customers’s instance(s) of the Services are tracked in an area known as the “Login History” and are available for viewing by Pass-Through Customers’s designated system administrator(s). Pass-Through Customers may download and store this data locally.

• Pass-Through Customers may implement functionality known as “Set History Tracking” to track the history of specific objects or fields within the Customer’s instance(s) of the Resold Services. All entries include the date, time, nature of the change, and the User who made the change.

6. Job control to ensure that personal data processed on behalf of others are processed strictly in compliance with the Data Controller’s instructions.

• As set forth in the DPA, Salesforce shall process Personal Data in accordance with the instructions of Reseller and/or Pass-Through Customers, including to provide the Resold Services as set forth in the Agreement and as instructed by Users in their use of the Resold Services.

7. Availability control to ensure that Personal Data are protected against accidental destruction or loss.

• Disaster recovery. Salesforce can utilize disaster recovery facilities that are geographically remote from primary data centers, along with required hardware, software, and Internet connectivity, in the event Salesforce production facilities at the primary data center were to be rendered unavailable. Salesforce has disaster recovery plans in place and tests them at least once per year. Salesforce will discuss results of these tests with Reseller on request.

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• Reliability and Backup. All networking components, SSL accelerators, load balancers, Web servers, and application servers are configured in a redundant configuration. All Customer Data is stored on a primary database server that is clustered with a backup database server for redundancy. All Customer Data is stored on carrier-class disk storage RAID disks and multiple data paths. All Customer Data, up to the last committed transaction, is automatically backed up on a regular basis. Any backup tapes are verified for integrity stored in an offsite facility in a secure, fire-resistant location.

• Viruses. The Resold Services will not introduce any viruses to Reseller’s systems; however, the Resold Services do not scan for viruses that could be included in attachments or other Customer Data uploaded into the Resold Services by Reseller and/or Pass-Through Customers. Any such uploaded attachments will not be executed in the Resold Services and therefore will not damage or compromise the Resold Services.

8. Segregation control to ensure that data collected for different purposes can be processed separately.

In providing the Resold Services, Salesforce implements the following controls:

• Strong logical separation of Customer Data, which is achieved via Reseller and/or Pass-Through Customers-specific “Organization IDs” that permit only Users to view related Customer Data.

The Resold Services provide the following functionality, which may be implemented by Pass-Through Customers in its use of the Resold Services:

• Pass-Through Customers may implement a granular sharing model and User permission profiles to limit data accessible to different Users.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Marc Benioff, certify that:

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

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

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

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

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

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

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

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

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

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

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

November 20, 2015	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark J. Hawkins, certify that:

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

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

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

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

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

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

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

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

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

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

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

November 20, 2015	/s/ MARK J. HAWKINS
	Mark J. Hawkins
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on my knowledge, I, Marc Benioff, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of salesforce.com, inc. on Form 10-Q for the period ended October 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of salesforce.com, inc.

November 20, 2015	/s/ MARC BENIOFF
	Marc Benioff
	Chairman of the Board of Directors and Chief Executive Officer

Based on my knowledge, I, Mark J. Hawkins, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of salesforce.com, inc. on Form 10-Q for the period ended October 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of salesforce.com, inc.

November 20, 2015	/s/ MARK J HAWKINS
	Mark J. Hawkins
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

XML

Investments - Schedule of Outstanding Foreign Currency Derivative Contracts Related Primarily to Intercompany Receivables and Payables (Detail) - Derivatives not designated as hedging instruments - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Derivative [Line Items]
Fair value of foreign currency derivative contracts	$ 1,793	$ 4,917
Foreign currency derivative contracts
Derivative [Line Items]
Notional amount of foreign currency derivative contracts	$ 1,067,250	$ 942,086

XML

Debt - Components of Warrants (Detail) $ / shares in Units, $ in Thousands	9 Months Ended
	Oct. 31, 2015 USD ($) $ / shares shares
Class of Warrant or Right [Line Items]
Warrants (in shares)	17,308,880
Convertible Debt | 0.25% Warrants
Class of Warrant or Right [Line Items]
Proceeds | $	$ 84,800
Warrants (in shares)	17,308,880
Strike Price (in dollars per share) | $ / shares	$ 90.40

XML

Business Combinations (Goodwill) (Details) $ in Thousands	9 Months Ended
	Oct. 31, 2015 USD ($)
Goodwill [Roll Forward]
Balance as of January 31, 2015	$ 3,782,660
Balance as of October 31, 2015	3,849,054
Other Business Combination
Goodwill [Roll Forward]
Other business combinations	$ 66,394

XML

Commitments - Additional Information (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Other Commitments [Line Items]
Financing obligation, building in progress-leased facility	$ 194,350	$ 125,289
Total operating lease commitment balance	2,900,000
Other Current and Noncurrent Liabilities [Member]
Other Commitments [Line Items]
Financing obligation, building in progress-leased facility	206,300
Letter of Credit
Other Commitments [Line Items]
Value of outstanding letters of credit	70,400
Facilities Space [Member]
Other Commitments [Line Items]
Total operating lease commitment balance	$ 1,900,000

XML

Debt - Schedule of Interest Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Debt Disclosure [Abstract]
Contractual interest expense	$ 2,843	$ 2,190	$ 9,036	$ 7,777
Amortization of debt issuance costs	1,027	1,132	3,077	3,490
Amortization of debt discount	6,148	8,637	18,317	28,837
Debt Instrument, Interest Expense, Total	$ 10,018	$ 11,959	$ 30,430	$ 40,104

XML

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

XML

Summary of Business and Significant Accounting Policies - Schedule of Assumptions Used to Calculate Fair Value of Options Granted (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	35.00%	37.00%		37.00%
Volatility, minimum			35.00%
Volatility, maximum			37.00%
Estimated life	3 years 7 months 6 days	3 years 6 months	3 years 7 months 6 days	3 years 6 months
Risk-free interest rate, minimum	1.21%	1.34%	1.13%	1.20%
Risk-free interest rate, maximum	1.27%	1.53%	1.42%	1.53%
Weighted-average fair value per share of grants (in dollars per share)	$ 19.72	$ 17.32	$ 19.79	$ 16.46
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility			34.00%
Volatility, minimum				34.00%
Volatility, maximum				35.00%
Estimated life			9 months	9 months
Risk-free interest rate, minimum			0.06%	0.07%
Risk-free interest rate, maximum			0.27%	0.16%
Weighted-average fair value per share of grants (in dollars per share)			$ 19.30	$ 14.53

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Other Balance Sheet Accounts - Schedule of Capitalized Software Costs (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Property, Plant and Equipment [Line Items]
Capitalized software costs	$ 397,013	$ 433,398
Capitalized internal-use software development costs, net of accumulated amortization of $172,728 and $136,314, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	114,058	96,617
Accumulated amortization	172,728	136,314
Acquired developed technology, net of accumulated amortization of $459,215 and $392,736, respectively
Property, Plant and Equipment [Line Items]
Capitalized software costs	282,955	336,781
Accumulated amortization	$ 459,215	$ 392,736

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Commitments - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating and Capital Leases (Detail) $ in Thousands	Oct. 31, 2015 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Future minimum lease payments under non-cancelable capital leases, Remaining three months of fiscal 2016	$ 16,437
Future minimum lease payments under non-cancelable capital leases, Fiscal 2017	116,792
Future minimum lease payments under non-cancelable capital leases, Fiscal 2018	121,012
Future minimum lease payments under non-cancelable capital leases, Fiscal 2019	114,085
Future minimum lease payments under non-cancelable capital leases, Fiscal 2020	201,507
Future minimum lease payments under non-cancelable capital leases, Thereafter	0
Future minimum lease payments under non-cancelable capital leases, Total	569,833
Less: amount representing interest	(61,973)
Present value of capital lease obligations	507,860
Future minimum lease payments under non-cancelable operating leases, Remaining six months of fiscal 2016	87,285
Future minimum lease payments under non-cancelable operating leases, Fiscal 2017	347,232
Future minimum lease payments under non-cancelable operating leases, Fiscal 2018	311,403
Future minimum lease payments under non-cancelable operating leases, Fiscal 2019	241,180
Future minimum lease payments under non-cancelable operating leases, Fiscal 2020	213,419
Future minimum lease payments under non-cancelable operating leases, Thereafter	1,344,224
Future minimum lease payments under non-cancelable operating leases, Total	2,544,743
Financing Obligation, Building in Progress-Leased Facility, Remaining six months of fiscal 2016	1,434
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2017	16,877
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2018	21,107
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2019	21,551
Financing Obligation, Building in Progress-Leased Facility, Fiscal 2020	21,995
Financing Obligation, Building in Progress-Leased Facility, Thereafter	252,517
Financing Obligation, Building in Progress-Leased Facility	$ 335,481

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Debt (Tables)

9 Months Ended

Oct. 31, 2015

Debt Disclosure [Abstract]

Summary of Convertible Senior Notes

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

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

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						October 31, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,088,910	$	1,070,692

___________ 

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

Schedule of Convertible Senior Notes

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

	As of
	October 31, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(61,090		)	(79,308		)
Net carrying amount	$	1,088,910		$	1,070,692

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

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

Summary of Hedge Notes

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

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

Components of Warrants

Warrants

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

Schedule of Interest Expense

The following table sets forth total interest expense recognized related to the 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Contractual interest expense	$	2,843	$	2,190	$	9,036	$	7,777
Amortization of debt issuance costs	1,027		1,132		3,077		3,490
Amortization of debt discount	6,148		8,637		18,317		28,837
	$	10,018	$	11,959	$	30,430	$	40,104

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Debt - Additional Information (Detail) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended
	Mar. 31, 2015	Feb. 28, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014	Mar. 31, 2013
Debt Instrument [Line Items]
Proceeds from revolving credit facility, net				$ 0	$ 297,325,000	$ 0	$ 297,325,000
Amount outstanding				0		0
Debt instrument, interest expense				$ 10,018,000	11,959,000	$ 30,430,000	40,104,000
50 Fremont Street
Debt Instrument [Line Items]
Loan assumed on 50 Fremont		$ 200,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 650,000,000		$ 650,000,000		$ 650,000,000
Proceeds from revolving credit facility, net			$ 300,000,000
Interest rate				1.60%		1.60%
Fee on undrawn amount of revolver						0.15%
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Commitment fee percentage			0.125%
Revolving Credit Facility | Minimum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate			0.00%
Revolving Credit Facility | Minimum | Adjusted LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.00%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Commitment fee percentage			0.25%
Revolving Credit Facility | Maximum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate			0.75%
Revolving Credit Facility | Maximum | Adjusted LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.75%
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Instrument [Line Items]
Par value								$ 1,150,000,000
Contractual interest rate				0.25%		0.25%		0.25%
Consecutive trading days threshold						20 days
Consecutive trading days threshold, total						30 days
Stock price trigger						130.00%
Notes price trigger						98.00%
Purchase price upon fundamental change				100.00%		100.00%
Estimated fair value of Company's senior notes				$ 1,500,000,000		$ 1,500,000,000
Fair value debt basis amount				$ 100		$ 100
Closing prices of Company's common stock				$ 77.71		$ 77.71
If-converted value in excess of principal						$ 195,100,000
Line of Credit
Debt Instrument [Line Items]
Repayments of debt	$ 300,000,000
Mortgage Loan | 50 Fremont Street
Debt Instrument [Line Items]
Contractual interest rate		3.75%
Loan assumed on 50 Fremont		$ 200,000,000
Debt instrument, interest expense				$ 1,900,000		$ 5,400,000

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Investments - Schedule of Components of Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Investments, Debt and Equity Securities [Abstract]
Interest income	$ 3,700	$ 2,720	$ 9,919	$ 7,051
Realized gains	257	78	3,197	424
Realized losses	(450)	(176)	(1,765)	(420)
Total investment income	$ 3,507	$ 2,622	$ 11,351	$ 7,055

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Investments - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Oct. 31, 2015 USD ($) investment	Jan. 31, 2015 USD ($) investment
Investment Holdings [Line Items]
Unrealized losses on fixed rate investments, upper range value	$ 74,000
Strategic Investments
Investment Holdings [Line Items]
Number of investments in marketable equity securities | investment	6	4
Unrealized gain on marketable securities	$ 18,300,000	$ 13,100,000
Investments in privately-held companies	470,800,000	158,000,000
Investments in privately-held companies, unrealized gains	183,200,000	122,000,000
Strategic Investments | Significant Unobservable Inputs (Level 3) | Estimate of Fair Value Measurement [Member] | Cost Approach Valuation Technique [Member]
Investment Holdings [Line Items]
Investments in privately-held companies, estimated fair value	654,000,000	280,000,000
Strategic Investments | Equity Securities
Investment Holdings [Line Items]
Fair value of marketable security	$ 26,000,000	$ 17,800,000

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Debt - Schedule of Convertible Senior Notes (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015	Mar. 31, 2013
Convertible Senior Notes
Debt Instrument [Line Items]
Net carrying amount	$ 1,088,910	$ 1,070,692
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Instrument [Line Items]
Principal	1,150,000	1,150,000
Less: debt discount, net	$ (61,090)	$ (79,308)
Interest percentage of convertible senior notes	0.25%		0.25%
Effective interest rates of Senior Notes	2.53%

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 68,548	$ 17,075	$ 90,339	$ 37,336
Income (loss) before provision for income taxes	43,391	$ (21,849)	$ 68,422	$ (159,587)
Effective tax rate			132.00%	23.00%
Income tax benefit recognized from stock compensation expense			$ 130,800	$ 125,700
Reasonably possible decrease of unrecognized tax benefits	$ 32,000		$ 32,000

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Other Balance Sheet Accounts - Schedule of Other Non current Liabilities (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Payables and Accruals [Abstract]
Deferred income taxes and income taxes payable	$ 113,801	$ 94,396
Customer liability, noncurrent	81	1,026
Financing obligation, building in progress-leased facility	194,350	125,289
Long-term lease liabilities and other	569,816	701,612
Other noncurrent liabilities	$ 878,048	$ 922,323

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

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Investments

9 Months Ended

Oct. 31, 2015

Investments Schedule [Abstract]

Investments

Investments

Marketable Securities

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

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	636,779	$	905	$	(1,678	)	$	636,006
U.S. treasury securities	126,837		149		(42		)	126,944
Mortgage backed obligations	84,288		94		(401		)	83,981
Asset backed securities	176,633		73		(240		)	176,466
Municipal securities	36,358		141		(30		)	36,469
Foreign government obligations	2,094		16		(2		)	2,108
U.S. agency obligations	8,998		5		(9		)	8,994
Covered bonds	6,863		157		0			7,020
Total marketable securities	$	1,078,850	$	1,540	$	(2,402	)	$	1,077,988

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

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

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

	As of
	October 31, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	134,687	$	87,312
Long-term (due after one year)	943,301		894,855
	$	1,077,988	$	982,167

As of October 31, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	330,654	$	(1,382	)	$	51,475	$	(296	)	$	382,129	$	(1,678	)
U.S. treasury securities	47,184		(42		)	0		0			47,184		(42		)
Mortgage backed obligations	51,412		(298		)	9,143		(103		)	60,555		(401		)
Asset backed securities	122,349		(212		)	7,398		(28		)	129,747		(240		)
Municipal securities	3,990		(18		)	3,949		(12		)	7,939		(30		)
Foreign government obligations	1,576		(2		)	0		0			1,576		(2		)
U.S. agency obligations	4,991		(9		)	0		0			4,991		(9		)
	$	562,156	$	(1,963	)	$	71,965	$	(439	)	$	634,121	$	(2,402	)

The unrealized losses for each of the fixed rate marketable securities were less than $74,000. The Company does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of October 31, 2015. The Company expects to receive the full principal and interest on all of these marketable securities.

Fair Value Measurement

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

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

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

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

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

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

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of October 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	235,695	$	0	$	235,695
Money market mutual funds	339,446		0		0		339,446
Marketable securities:
Corporate notes and obligations	0		636,006		0		636,006
U.S. treasury securities	0		126,944		0		126,944
Mortgage backed obligations	0		83,981		0		83,981
Asset backed securities	0		176,466		0		176,466
Municipal securities	0		36,469		0		36,469
Foreign government obligations	0		2,108		0		2,108
U.S. agency obligations	0		8,994		0		8,994
Covered bonds	0		7,020		0		7,020
Foreign currency derivative contracts (2)	0		7,789		0		7,789
Total Assets	$	339,446	$	1,321,472	$	0	$	1,660,918
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,996	$	0	$	5,996
Total Liabilities	$	0	$	5,996	$	0	$	5,996

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of October 31, 2015, in addition to $648.2 million of cash.

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

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

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

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

______________ 

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

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

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

Derivative Financial Instruments

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

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

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

	As of
	October 31, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	1,067,250	$	942,086
Fair value of foreign currency derivative contracts	$	1,793	$	4,917

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

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	October 31, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	7,789	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	5,996	$	5,694

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three and nine months ended October 31, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Losses on Derivative Instruments Recognized in Income
		Three Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	(2,888	)	$	(3,068	)
Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Nine Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	9,773		$	(2,964	)

Strategic Investments

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

As of October 31, 2015, the Company had six investments in marketable equity securities with a fair value of $26.0 million, which includes an unrealized gain of $18.3 million. As of January 31, 2015, the Company had four investments in marketable equity securities with a fair value of $17.8 million, which included an unrealized gain of $13.1 million. The change in the fair value of the investments in publicly held companies is recorded in the condensed consolidated balance sheets within strategic investments and accumulated other comprehensive loss.

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

As of October 31, 2015 and January 31, 2015, the carrying value of the Company’s non-marketable debt and equity securities was $470.8 million and $158.0 million, respectively. The estimated fair value of the non-marketable debt and equity securities was approximately $654.0 million and $280.0 million as of October 31, 2015 and January 31, 2015, respectively. These investments are measured using the cost method of accounting, therefore the unrealized gains of $183.2 million and $122.0 million as of October 31, 2015 and January 31, 2015, respectively, are not recorded in the condensed consolidated financial statements.

Investment Income

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Interest income	$	3,700		$	2,720		$	9,919		$	7,051
Realized gains	257			78			3,197			424
Realized losses	(450		)	(176		)	(1,765		)	(420		)
Total investment income	$	3,507		$	2,622		$	11,351		$	7,055

Reclassification adjustments out of accumulated other comprehensive loss into net income (loss) were immaterial for the three and nine months ended October 31, 2015 and 2014, respectively.

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Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		9 Months Ended		24 Months Ended	90 Months Ended
	Jan. 31, 2006	Oct. 31, 2015	Oct. 31, 2014	Jul. 31, 2015	Jul. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of the options exercised during the period		$ 251.3	$ 202.0
Weighted-average remaining contractual life of vested and expected to vest options (in years)		4 years 6 months
Options vested		7,999,144
Weighted average exercise price vested		$ 37.53
Weighted-average contractual life of vested and expected to vest options (in years)		2 years 10 months 24 days
Intrinsic value of vested options		$ 321.4
Weighted-average exercise price		$ 0.001
Restricted stock units, vesting period (in years)		4 years
Weighted-average grant date fair value of the restricted stock units issued		$ 70.26	$ 58.84
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual life of stock options (in years)	10 years			7 years	5 years
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount withheld on behalf of employees for future purchases		$ 74.4

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Property and Equipment (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,585,618	$ 1,745,693
Less accumulated depreciation and amortization	(843,476)	(619,827)
Property and equipment, net	1,742,142	1,125,866
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	183,888	0
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	614,349	125,289
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,259,210	1,171,762
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	77,606	71,881
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 450,565	$ 376,761

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Commitments (Tables)

9 Months Ended

Oct. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

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

As of October 31, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining three months of fiscal 2016	$	16,437		$	87,285	$	1,434
Fiscal 2017	116,792			347,232		16,877
Fiscal 2018	121,012			311,403		21,107
Fiscal 2019	114,085			241,180		21,551
Fiscal 2020	201,507			213,419		21,995
Thereafter	0			1,344,224		252,517
Total minimum lease payments	569,833			$	2,544,743	$	335,481
Less: amount representing interest	(61,973		)
Present value of capital lease obligations	$	507,860

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of October 31, 2015, $206.3 million of the total obligation noted above was recorded to Financing obligation, building in progress - leased facility, of which the current portion is included in "Accounts payable, accrued expenses, and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the condensed consolidated balance sheets.

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Earnings/Loss Per Share (Tables)

9 Months Ended

Oct. 31, 2015

Earnings Per Share [Abstract]

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

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Numerator:
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Denominator:
Weighted-average shares outstanding for basic loss per share	664,131			629,548			659,160			619,748
Effect of dilutive securities:
Convertible senior notes	0			0			0			0
Employee stock awards	0			0			0			0
Warrants	0			0			0			0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,131			629,548			659,160			619,748

Shares Excluded From Diluted Earnings Or Loss Per Share

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

	Three Months Ended October 31,		Nine Months Ended October 31,
	2015	2014	2015	2014
Stock awards	20,191	19,922	22,634	20,115
Convertible senior notes	17,309	25,820	17,309	28,834
Warrants	17,309	44,253	17,309	44,253

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Other Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred income taxes, net	$ 42,605	$ 35,528
Prepaid income taxes	23,167	21,514
Customer contract asset	3,572	16,620
Other taxes receivable	32,187	27,540
Prepaid expenses and other current assets	210,378	179,352
Prepaid expenses and other current assets	$ 311,909	$ 280,554

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Property and Equipment - Additional Information (Detail) ft² in Thousands	1 Months Ended	3 Months Ended			9 Months Ended
	Oct. 31, 2015 USD ($) a	Oct. 31, 2015 USD ($) a	Oct. 31, 2014 USD ($)	Apr. 30, 2014 USD ($)	Oct. 31, 2015 USD ($) a	Oct. 31, 2014 USD ($)	Jan. 31, 2015 USD ($)	Dec. 31, 2012 ft²
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense		$ 77,400,000	$ 64,600,000		$ 226,600,000	$ 181,700,000
Fixed assets acquired under capital lease agreements	$ 743,300,000	743,300,000			743,300,000		$ 734,700,000
Proceeds from land and building improvements held for sale		127,066,000	192,240,000		127,066,000	223,240,000
Net rentable area (in square feet) | ft²								445
Property and equipment, gross	2,585,618,000	2,585,618,000			2,585,618,000		1,745,693,000
Financing obligation, building in progress-leased facility, current	11,930,000	11,930,000			11,930,000		0
Noncurrent financing obligation liability	194,400,000	194,400,000			194,400,000
Financing obligation, tenant improvements	25,000,000	25,000,000			25,000,000
Financing obligation, imputed interest	5,700,000	5,700,000			5,700,000
Expected financing obligation	$ 335,481,000	335,481,000			335,481,000
Impairment of long-lived assets		$ 0	$ 0		$ 0	$ 0
Undeveloped Real Estate
Property, Plant and Equipment [Line Items]
Area of land | a	8.8	8.8			8.8
Undeveloped Real Estate and Portion of Perpetual Parking Rights
Property, Plant and Equipment [Line Items]
Proceeds from land and building improvements held for sale	$ 157,100,000	$ 127,100,000
Proceeds from deposit from disposition of property				$ 30,000,000
Gain on disposition of property	21,800,000
Computers, equipment and software
Property, Plant and Equipment [Line Items]
Accumulated depreciation and amortization	285,400,000	285,400,000			$ 285,400,000		206,700,000
Property and equipment, gross	1,259,210,000	1,259,210,000			1,259,210,000		$ 1,171,762,000
Building in progress—leased facility
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 175,900,000	$ 175,900,000			$ 175,900,000

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Summary of Business and Significant Accounting Policies - Additional Information (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2015 customer country	Oct. 31, 2014 customer country	Oct. 31, 2015 customer segment country	Oct. 31, 2014 customer country	Jan. 31, 2015 customer
Concentration Risk [Line Items]
Number of operating segments | segment			1
Vesting period			4 years
Offering period			12 months
Expected dividend yield			0.00%
Percentage of tax benefit likely to be realized upon settlement (greater than 50%)			50.00%
Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Customers exceeding concentration of accounts receivable threshold, number	0		0		0
Concentration risk percentage			5.00%		5.00%
Revenue | Customer Concentration Risk
Concentration Risk [Line Items]
Customers exceeding concentration of total revenue threshold, number	0	0	0	0
Concentration risk percentage	5.00%	5.00%	5.00%	5.00%
Revenue | Geographic Concentration Risk | Americas
Concentration Risk [Line Items]
Concentration risk percentage	95.00%	95.00%	94.00%	94.00%
Revenue | Geographic Concentration Risk | All Other Countries
Concentration Risk [Line Items]
Countries exceeding concentration of total revenue threshold, number | country	0	0	0	0
Concentration risk percentage	10.00%	10.00%	10.00%	10.00%
Assets | Geographic Concentration Risk | Outside Americas
Concentration Risk [Line Items]
Concentration risk percentage			9.00%		12.00%
Minimum
Concentration Risk [Line Items]
Deferred and amortized commission period			12 months
Maximum
Concentration Risk [Line Items]
Deferred and amortized commission period			36 months

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Summary of Business and Significant Accounting Policies - Revenues by Geographical Region (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 1,711,967	$ 1,383,655	$ 4,857,818	$ 3,928,978
Reportable Geographical Components [Member] | Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,258,148	995,331	3,575,441	2,812,654
Reportable Geographical Components [Member] | Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	302,704	252,982	848,413	730,324
Reportable Geographical Components [Member] | Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 151,115	$ 135,342	$ 433,964	$ 386,000

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Summary of Business and Significant Accounting Policies

9 Months Ended

Oct. 31, 2015

Accounting Policies [Abstract]

Summary of Business and Significant Accounting Policies

Summary of Business and Significant Accounting Policies

Description of Business

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

Fiscal Year

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

Basis of Presentation

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

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

Use of Estimates

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

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

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

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

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

• the fair value of convertible notes,

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

• the useful lives of intangible assets and property and equipment,

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

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

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

Principles of Consolidation

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

Segments

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

Concentrations of Credit Risk and Significant Customers

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

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

Geographic Locations

As of October 31, 2015 and January 31, 2015, assets located outside the Americas were nine percent and 12 percent of total assets, respectively.

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Americas	$	1,258,148	$	995,331	$	3,575,441	$	2,812,654
Europe	302,704		252,982		848,413		730,324
Asia Pacific	151,115		135,342		433,964		386,000
	$	1,711,967	$	1,383,655	$	4,857,818	$	3,928,978

Americas revenue attributed to the United States was approximately 95 percent and 94 percent during the three and nine months ended October 31, 2015 and 2014. No other country represented more than ten percent of total revenue during the three and nine months ended October 31, 2015 and 2014.

Revenue Recognition

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

The Company commences revenue recognition when all of the following conditions are satisfied:

• there is persuasive evidence of an arrangement;

• the service has been or is being provided to the customer;

• the collection of the fees is reasonably assured; and

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

The Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Subscription and Support Revenues

Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company’s service is made available to customers.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Professional Services and Other Revenues

The majority of the Company’s professional services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

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

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

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

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

Deferred Revenue

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

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

Deferred Commissions

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

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

Cash and Cash Equivalents

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

Marketable Securities

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

Fair Value Measurement

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

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

Property and Equipment

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

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	The remaining lease term or up to 10 years

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

Capitalized Internal-Use Software Costs

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

Goodwill and Intangible Assets Impairment Assessments

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

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

Long- Lived Assets and Impairment Assessment

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

Business Combinations

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

Leases and Asset Retirement Obligations

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

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

In the event the Company is the deemed owner for accounting purposes during construction, the Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

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

Accounting for Stock-Based Expense

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

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

	Three Months Ended   October 31,						Nine Months Ended   October 31,
Stock Options	2015			2014			2015			2014
Volatility	35		%	37		%	35-37		%	37		%
Estimated life	3.6 years			3.5 years			3.6 years			3.5 years
Risk-free interest rate	1.21-1.27		%	1.34-1.53		%	1.13-1.42		%	1.20-1.53		%
Weighted-average fair value per share of grants	$	19.72		$	17.32		$	19.79		$	16.46

	Three Months Ended   October 31,		Nine Months Ended   October 31,
ESPP	2015	2014	2015			2014
Volatility	n/a	n/a	34		%	34-35		%
Estimated life	n/a	n/a	0.75 years			0.75 years
Risk-free interest rate	n/a	n/a	0.06-0.27		%	0.07-0.16		%
Weighted-average fair value per share of grants	n/a	n/a	$	19.30		$	14.53

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

Income Taxes

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

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

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

Foreign Currency Translation

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

Warranties and Indemnification

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

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

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

New Accounting Pronouncements

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

In May 2013, FASB issued Accounting Standards Update No. 2013-270, “a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)” (“ASU 2013-270”), to place leases on lessee’s balance sheets. ASU 2013-270 states a lessee would recognize a lease liability for lease payments and recognize an asset for its right to use the leased asset during the lease term. In November 2015, FASB set an effective date for annual periods after December 2018. The Company plans to adopt ASU 2013-270 in fiscal 2020 and is currently evaluating the impact to its condensed consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”) which eliminates the requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2015-16 on its condensed consolidated financial statements.

Reclassification

Certain reclassifications to the fiscal 2015 balances were made to conform to the current period presentation in the Balance Sheet. These reclassifications include strategic investments and other assets, net.

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Summary of Business and Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Detail)	9 Months Ended
	Oct. 31, 2015
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Minimum | Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Minimum | Capitalized internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Maximum | Computers, equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	9 years
Maximum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	10 years
Maximum | Capitalized internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years

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Investments - Fair Value of Outstanding Derivative Instruments (Detail) - Derivatives not designated as hedging instruments - Foreign currency derivative contracts - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 7,789	$ 10,611
Accounts payable, accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative Liabilities	$ 5,996	$ 5,694

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Debt - Summary of Hedge Notes (Detail) - Convertible Debt - 0.25% Note Hedges $ in Thousands	9 Months Ended
	Oct. 31, 2015 USD ($) shares
Derivatives, Fair Value [Line Items]
Purchase | $	$ 153,800
Shares	17,308,880

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Related-Party Transactions (Details) - Affiliated Entity [Member] $ in Millions	3 Months Ended	9 Months Ended
	Oct. 31, 2015 USD ($) board_member board_seat employee	Oct. 31, 2015 USD ($) board_member board_seat employee
Related Party Transaction [Line Items]
Number of Company's Board Members that Hold Board Seats in Foundation	1	1
Number of Board Seats in Foundation	3	3
Number of Company's Employees that Hold Board Seats in Non-Profit | employee	1	1
Number Company's Board Members that Hold Board Seats in Non-Profit | board_member	1	1
Number of Board Seats in Non-Profit Held by Company's Employees and Board Members	3	3
Number of Board Seats in Non-Profit	10	10
Value of resources donated to related parties | $	$ 0.9
Value of donated subscriptions to related parties | $		$ 48.2
Donation commitment to related party | $		$ 4.0

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Current assets:
Cash and cash equivalents	$ 1,223,318	$ 908,117
Short-term marketable securities	134,687	87,312
Accounts receivable, net	1,060,726	1,905,506
Deferred commissions	208,133	225,386
Prepaid expenses and other current assets	311,909	280,554
Land and building improvements held for sale	0	143,197
Total current assets	2,938,773	3,550,072
Marketable securities, noncurrent	943,301	894,855
Property and equipment, net	1,742,142	1,125,866
Deferred commissions, noncurrent	148,147	162,796
Capitalized software, net	397,013	433,398
Goodwill	3,849,054	3,782,660
Strategic investments	496,809	175,774
Other assets, net	396,727	452,546
Restricted cash	0	115,015
Total assets	10,911,966	10,692,982
Current liabilities:
Accounts payable, accrued expenses and other liabilities	1,149,693	1,103,335
Deferred revenue	2,827,285	3,286,768
Total current liabilities	3,976,978	4,390,103
Convertible 0.25% senior notes, net	1,088,910	1,070,692
Loan assumed on 50 Fremont	198,851	0
Revolving credit facility	0	300,000
Deferred revenue, noncurrent	19,225	34,681
Other noncurrent liabilities	878,048	922,323
Total liabilities	6,162,012	6,717,799
Stockholders’ equity:
Common stock	664	651
Additional paid-in capital	5,410,377	4,604,485
Accumulated other comprehensive loss	(33,325)	(24,108)
Accumulated deficit	(627,762)	(605,845)
Total stockholders’ equity	4,749,954	3,975,183
Total liabilities and stockholders’ equity	$ 10,911,966	$ 10,692,982

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Business Combinations (Narrative) (Details) ft² in Thousands, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2015 USD ($) ft² story	Oct. 31, 2015 USD ($)	Oct. 31, 2014 USD ($)	Oct. 31, 2015 USD ($) ft²	Oct. 31, 2014 USD ($)	Dec. 31, 2012 ft²
Business Acquisition [Line Items]
Net rentable area (in square feet) | ft²						445
Business combinations, net of cash acquired		$ 27,759	$ (38,071)	$ 58,680	$ (38,071)
50 Fremont Street
Business Acquisition [Line Items]
Number of stories in building | story	41
Net rentable area (in square feet) | ft²	817
Area leased | ft²	500			567
Proceeds of like-kind exchange account	$ 115,000
Non-cash gain on termination of lease	36,600
Reversal of tenant incentives	46,100
Termination of salesforce operating lease	$ 9,483
Other Business Combination
Business Acquisition [Line Items]
Business combinations, net of cash acquired				$ 60,100
Other business combinations				$ 66,394

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Statement of Comprehensive Income [Abstract]
Net loss	$ (25,157)	$ (38,924)	$ (21,917)	$ (196,923)
Other comprehensive loss, before tax and net of reclassification adjustments:
Foreign currency translation and other losses	(1,173)	(13,692)	(8,419)	(15,876)
Unrealized gains (loss) on investments	(2,873)	1,278	337	(3,055)
Other comprehensive loss, before tax	(4,046)	(12,414)	(8,082)	(18,931)
Tax effect	(1,135)	0	(1,135)	0
Other comprehensive loss, net of tax	(5,181)	(12,414)	(9,217)	(18,931)
Comprehensive loss	$ (30,338)	$ (51,338)	$ (31,134)	$ (215,854)

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Other Balance Sheet Accounts - Schedule of Other Assets (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Deferred income taxes, noncurrent, net	$ 7,236	$ 9,275
Long-term deposits	20,126	19,715
Customer contract asset	115	1,447
Other	79,185	76,259
Other assets, net	396,727	452,546
Purchased intangible assets, net of accumulated amortization of $191,807 and $130,968, respectively
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	277,898	329,971
Accumulated amortization	191,807	130,968
Acquired intellectual property, net of accumulated amortization of $20,837 and $15,695, respectively
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	12,167	15,879
Accumulated amortization	$ 20,837	$ 15,695

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Investments - Schedule of Short-Term and Long-Term Marketable Securities (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Short-term (due in one year or less)	$ 134,687	$ 87,312
Long-term (due after one year)	943,301	894,855
Fair Value of Marketable Securities	$ 1,077,988	$ 982,167

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Stockholders' Equity - Schedule of Restricted Stock Activity (Detail) $ / shares in Units, $ in Thousands	9 Months Ended
	Oct. 31, 2015 USD ($) $ / shares shares
Restricted Stock Outstanding
Ending Balance	17,508,771
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Restricted Stock Activity
Restricted Stock Outstanding
Beginning Balance	23,144,008
Granted, Outstanding	2,714,178
Cancelled, Outstanding	(2,296,785)
Vested and converted to shares, Outstanding	(6,052,630)
Ending Balance	17,508,771
Expected to vest, Outstanding	15,326,839
Restricted Stock Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Granted | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Cancelled | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Vested and converted to shares | $ / shares	0.001
Weighted- Average Exercise Price, Restricted Stock Outstanding, Balance | $ / shares	$ 0.001
Restricted Stock Outstanding Aggregate Intrinsic Value
Aggregate Intrinsic Value, Ending Balance | $	$ 1,360,607
Aggregate Intrinsic Value, Expected to vest | $	$ 1,191,049

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Investments (Tables)

9 Months Ended

Oct. 31, 2015

Investments Schedule [Abstract]

Schedule of Marketable Securities

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

Investments classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate notes and obligations	$	636,779	$	905	$	(1,678	)	$	636,006
U.S. treasury securities	126,837		149		(42		)	126,944
Mortgage backed obligations	84,288		94		(401		)	83,981
Asset backed securities	176,633		73		(240		)	176,466
Municipal securities	36,358		141		(30		)	36,469
Foreign government obligations	2,094		16		(2		)	2,108
U.S. agency obligations	8,998		5		(9		)	8,994
Covered bonds	6,863		157		0			7,020
Total marketable securities	$	1,078,850	$	1,540	$	(2,402	)	$	1,077,988

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

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

Schedule of Short-Term and Long-Term Marketable Securities

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

	As of
	October 31, 2015		January 31, 2015
Recorded as follows:
Short-term (due in one year or less)	$	134,687	$	87,312
Long-term (due after one year)	943,301		894,855
	$	1,077,988	$	982,167

Schedule of Marketable Securities in a Unrealized Loss Position

As of October 31, 2015, the following marketable securities were in an unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate notes and obligations	$	330,654	$	(1,382	)	$	51,475	$	(296	)	$	382,129	$	(1,678	)
U.S. treasury securities	47,184		(42		)	0		0			47,184		(42		)
Mortgage backed obligations	51,412		(298		)	9,143		(103		)	60,555		(401		)
Asset backed securities	122,349		(212		)	7,398		(28		)	129,747		(240		)
Municipal securities	3,990		(18		)	3,949		(12		)	7,939		(30		)
Foreign government obligations	1,576		(2		)	0		0			1,576		(2		)
U.S. agency obligations	4,991		(9		)	0		0			4,991		(9		)
	$	562,156	$	(1,963	)	$	71,965	$	(439	)	$	634,121	$	(2,402	)

Schedule of Assets and Liabilities Measured at Fair Value an a Recurring Basis

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

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balances as of October 31, 2015
Cash equivalents (1):
Time deposits	$	0	$	235,695	$	0	$	235,695
Money market mutual funds	339,446		0		0		339,446
Marketable securities:
Corporate notes and obligations	0		636,006		0		636,006
U.S. treasury securities	0		126,944		0		126,944
Mortgage backed obligations	0		83,981		0		83,981
Asset backed securities	0		176,466		0		176,466
Municipal securities	0		36,469		0		36,469
Foreign government obligations	0		2,108		0		2,108
U.S. agency obligations	0		8,994		0		8,994
Covered bonds	0		7,020		0		7,020
Foreign currency derivative contracts (2)	0		7,789		0		7,789
Total Assets	$	339,446	$	1,321,472	$	0	$	1,660,918
Liabilities
Foreign currency derivative contracts (3)	$	0	$	5,996	$	0	$	5,996
Total Liabilities	$	0	$	5,996	$	0	$	5,996

_____________ 

(1)Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheet as of October 31, 2015, in addition to $648.2 million of cash.

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

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

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

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

______________ 

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

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

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

Schedule of Outstanding Foreign Currency Derivative Contracts Related Primarily to Intercompany Receivables and Payables

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

	As of
	October 31, 2015		January 31, 2015
Notional amount of foreign currency derivative contracts	$	1,067,250	$	942,086
Fair value of foreign currency derivative contracts	$	1,793	$	4,917

Fair Value of Outstanding Derivative Instruments

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

		Fair Value of Derivative Instruments
		As of
	Balance Sheet Location	October 31, 2015		January 31, 2015
Derivative Assets
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	7,789	$	10,611
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	5,996	$	5,694

Schedule of The Effect of The Derivative Instruments Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Operations

The effect of the derivative instruments not designated as hedging instruments on the condensed consolidated statements of operations during the three and nine months ended October 31, 2015 and 2014, respectively, are summarized below (in thousands):

Derivatives Not Designated as Hedging Instruments	Losses on Derivative Instruments Recognized in Income
		Three Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	(2,888	)	$	(3,068	)
Derivatives Not Designated as Hedging Instruments	Gains (Losses) on Derivative Instruments Recognized in Income
		Nine Months Ended   October 31,
	Location	2015			2014
Foreign currency derivative contracts	Other expense	$	9,773		$	(2,964	)

Schedule of Components of Investment Income

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Interest income	$	3,700		$	2,720		$	9,919		$	7,051
Realized gains	257			78			3,197			424
Realized losses	(450		)	(176		)	(1,765		)	(420		)
Total investment income	$	3,507		$	2,622		$	11,351		$	7,055

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Investments - Schedule of Marketable Securities in Unrealized Loss Position (Detail) $ in Thousands	Oct. 31, 2015 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	$ 562,156
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(1,963)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	71,965
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(439)
Marketable securities in an unrealized loss position, Fair Value	634,121
Marketable securities in an unrealized loss position, Unrealized Losses	(2,402)
Corporate notes and obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	330,654
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(1,382)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	51,475
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(296)
Marketable securities in an unrealized loss position, Fair Value	382,129
Marketable securities in an unrealized loss position, Unrealized Losses	(1,678)
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	47,184
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(42)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	47,184
Marketable securities in an unrealized loss position, Unrealized Losses	(42)
Mortgage backed obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	51,412
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(298)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	9,143
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(103)
Marketable securities in an unrealized loss position, Fair Value	60,555
Marketable securities in an unrealized loss position, Unrealized Losses	(401)
Asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	122,349
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(212)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	7,398
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(28)
Marketable securities in an unrealized loss position, Fair Value	129,747
Marketable securities in an unrealized loss position, Unrealized Losses	(240)
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	3,990
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(18)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	3,949
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	(12)
Marketable securities in an unrealized loss position, Fair Value	7,939
Marketable securities in an unrealized loss position, Unrealized Losses	(30)
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	1,576
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(2)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	1,576
Marketable securities in an unrealized loss position, Unrealized Losses	(2)
U.S. agency obligations
Schedule of Available-for-sale Securities [Line Items]
Marketable securities in an unrealized loss position for less than 12 months, Fair Value	4,991
Marketable securities in an unrealized loss position for less than 12 months, Unrealized Losses	(9)
Marketable securities in an unrealized loss position for more than 12 months, Fair Value	0
Marketable securities in an unrealized loss position for more than 12 months, Unrealized Losses	0
Marketable securities in an unrealized loss position, Fair Value	4,991
Marketable securities in an unrealized loss position, Unrealized Losses	$ (9)

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Business Combinations (Tables)

9 Months Ended

Oct. 31, 2015

Business Acquisition [Line Items]

Schedule of Goodwill

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combinations	66,394
Balance as of October 31, 2015	$	3,849,054

50 Fremont Street

Business Acquisition [Line Items]

Schedule of Consideration Transferred

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

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

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

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

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

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Earnings/Loss Per Share - Reconciliation of Denominator Used in Calculation of Basic and Diluted Loss Per Share (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Earnings Per Share [Abstract]
Net loss	$ (25,157)	$ (38,924)	$ (21,917)	$ (196,923)
Weighted-average shares outstanding for basic loss per share (in shares)	664,131	629,548	659,160	619,748
Convertible senior notes (in shares)	0	0	0	0
Employee stock awards (in shares)	0	0	0	0
Warrants (in shares)	0	0	0	0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share (in shares)	664,131	629,548	659,160	619,748

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Condensed Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Operating activities:
Net loss		$ (25,157)	$ (38,924)	$ (21,917)	$ (196,923)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		134,236	111,954	393,838	330,358
Amortization of debt discount and transaction costs		7,138	9,420	20,290	31,160
Gain on sales of land and building improvements		(21,792)	(15,625)	(21,792)	(15,625)
50 Fremont lease termination, net	[1],[2]	0	0	(36,617)	0
Loss on conversions of convertible senior notes		0	1,340	0	10,230
Abandonment of leasehold improvement		7,086	0	7,086	0
Amortization of deferred commissions		78,934	65,371	232,768	186,526
Expenses related to employee stock plans		144,317	139,460	434,656	412,963
Excess tax benefits from employee stock plans		(44,607)	(1,221)	(48,698)	(3,447)
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net		15,262	39,792	853,014	566,306
Deferred commissions		(80,030)	(64,280)	(200,867)	(171,022)
Prepaid expenses and other current assets and other assets		33,841	6,588	4,495	34,501
Accounts payable, accrued expenses and other liabilities		57,577	(1,933)	12,276	(44,894)
Deferred revenue		(188,898)	(129,431)	(475,357)	(298,642)
Net cash provided by operating activities		117,907	122,511	1,153,175	841,491
Investing activities:
Business combinations, net of cash acquired		(27,759)	38,071	(58,680)	38,071
Proceeds from land and building improvements held for sale		127,066	192,240	127,066	223,240
Purchase of 50 Fremont land and building		0	0	(425,376)	0
Deposit for purchase of 50 Fremont land and building		0	(114,935)	115,015	(114,935)
Non-refundable amounts received for sale of land available for sale		0	0	6,284	0
Strategic investments		(30,330)	(12,852)	(325,226)	(47,905)
Purchases of marketable securities		(200,001)	(154,560)	(543,422)	(690,024)
Sales of marketable securities		91,153	46,908	414,259	197,293
Maturities of marketable securities		7,166	22,288	23,445	46,248
Capital expenditures		(80,041)	(73,426)	(216,011)	(205,100)
Net cash used in investing activities		(112,746)	(56,266)	(882,646)	(553,112)
Financing activities:
Proceeds from revolving credit facility, net		0	297,325	0	297,325
Proceeds from employee stock plans		98,016	91,337	367,830	226,561
Excess tax benefits from employee stock plans		44,607	1,221	48,698	3,447
Payments on convertible senior notes		0	(89,645)	0	(387,229)
Principal payments on capital lease obligations		(10,945)	(10,345)	(68,844)	(61,280)
Payments on revolving credit facility and term loan		0	(270,000)	(300,000)	(285,000)
Net cash provided by (used in) financing activities		131,678	19,893	47,684	(206,176)
Effect of exchange rate changes		(2,872)	(14,538)	(3,012)	(17,513)
Net increase in cash and cash equivalents		133,967	71,600	315,201	64,690
Cash and cash equivalents, beginning of period		1,089,351	774,725	908,117	781,635
Cash and cash equivalents, end of period		1,223,318	846,325	1,223,318	846,325
Cash paid during the period for:
Interest		4,085	4,285	32,756	21,274
Income taxes, net of tax refunds		8,248	6,187	24,450	30,986
Non-cash financing and investing activities:
Fixed assets acquired under capital leases		2,065	38,604	7,191	119,939
Building in progress - leased facility acquired under financing obligation		38,477	29,756	75,336	62,804
Fair value of loan assumed on 50 Fremont		$ 0	$ 0	$ 198,751	$ 0
Fair value of common stock issued as consideration for business combinations		0	338,033	0	338,033

[1] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended October 31, Nine Months Ended October 31, 2015 2014 2015 2014Cost of revenues$20,296 $20,351 $60,825 $70,294Marketing and sales18,966 15,095 57,995 44,708Other non-operating expense761 0 2,877 0

[2] Amounts include stock-based expense, as follows: Three Months Ended October 31, Nine Months Ended October 31, 2015 2014 2015 2014Cost of revenues$17,516 $14,118 $49,237 $38,905Research and development31,534 26,868 96,508 87,264Marketing and sales69,561 72,892 211,819 210,510General and administrative25,706 25,582 77,092 76,284

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Condensed Consolidated Balance Sheets (Parenthetical)	Oct. 31, 2015	Jan. 31, 2015
Notes Payable to Banks | 0.25% Convertible Senior Notes due April 1, 2018
Interest percentage of convertible senior notes	0.25%	0.25%

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Commitments

9 Months Ended

Oct. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments

Letters of Credit

As of October 31, 2015, the Company had a total of $70.4 million in letters of credit outstanding substantially in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through December 2030.

Leases

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

As of October 31, 2015, the future minimum lease payments under non-cancelable operating and capital leases are as follows (in thousands):

	Capital Leases			Operating Leases		Financing Obligation, Building in Progress-Leased Facility(1)
Fiscal Period:
Remaining three months of fiscal 2016	$	16,437		$	87,285	$	1,434
Fiscal 2017	116,792			347,232		16,877
Fiscal 2018	121,012			311,403		21,107
Fiscal 2019	114,085			241,180		21,551
Fiscal 2020	201,507			213,419		21,995
Thereafter	0			1,344,224		252,517
Total minimum lease payments	569,833			$	2,544,743	$	335,481
Less: amount representing interest	(61,973		)
Present value of capital lease obligations	$	507,860

______________ 

(1) Total Financing Obligation, Building in Progress-Leased Facility noted above represents the total obligation on the lease agreement including amounts allocated to interest noted in Note 3 “Property and Equipment.” As of October 31, 2015, $206.3 million of the total obligation noted above was recorded to Financing obligation, building in progress - leased facility, of which the current portion is included in "Accounts payable, accrued expenses, and other liabilities" and the non-current portion is included in “Other noncurrent liabilities” on the condensed consolidated balance sheets.

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

The terms of the lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Of the total operating lease commitment and financing obligation, building in progress- leased facility balance of $2.9 billion, approximately $1.9 billion is related to facilities space. The remaining commitment amount is related to computer equipment, other leases, data center capacity and our development and test data center.

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Document and Entity Information shares in Millions	9 Months Ended
	Oct. 31, 2015 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	CRM
Entity Registrant Name	SALESFORCE COM INC
Entity Central Index Key	0001108524
Current Fiscal Year End Date	--01-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	664.0

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Legal Proceedings and Claims

9 Months Ended

Oct. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings and Claims

Legal Proceedings and Claims

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

In July 2015, the Company and certain of its current and former directors were named as defendants in a purported shareholder derivative action in the Superior Court for the State of California, County of San Francisco. The plaintiff filed an amended version of this derivative complaint in November 2015. The derivative complaint alleges that excessive compensation was paid to such directors for their service. The derivative complaint includes allegations of breach of fiduciary duty and unjust enrichment and seeks restitution and disgorgement of a portion of the directors' compensation, as well as reform of a Company equity plan. Because the complaint is derivative in nature, it does not seek monetary damages from the Company.

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

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

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

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Revenues:
Subscription and support		$ 1,596,333	$ 1,288,513	$ 4,522,939	$ 3,668,406
Professional services and other		115,634	95,142	334,879	260,572
Total revenues		1,711,967	1,383,655	4,857,818	3,928,978
Cost of revenues:
Subscription and support	[1],[2]	303,045	238,746	870,023	666,611
Professional services and other	[1],[2]	120,638	94,465	340,846	266,736
Total cost of revenues	[1],[2]	423,683	333,211	1,210,869	933,347
Gross profit	[1],[2]	1,288,284	1,050,444	3,646,949	2,995,631
Operating expenses:
Research and development	[1],[2]	239,212	195,460	695,440	586,927
Marketing and sales	[1],[2]	818,820	709,643	2,349,449	2,020,956
General and administrative	[1],[2]	186,818	167,383	544,314	498,565
Operating lease termination resulting from purchase of 50 Fremont, net	[1],[2]	0	0	(36,617)	0
Total operating expenses	[1],[2]	1,244,850	1,072,486	3,552,586	3,106,448
Income (loss) from operations		43,434	(22,042)	94,363	(110,817)
Investment income		3,507	2,622	11,351	7,055
Interest expense		(18,249)	(17,682)	(53,020)	(56,355)
Gain on sales of land and building improvements		21,792	15,625	21,792	15,625
Other income (expense)	[1],[3]	(7,093)	(372)	(6,064)	(15,095)
Income (loss) before provisions for income taxes		43,391	(21,849)	68,422	(159,587)
Provisions for income taxes		(68,548)	(17,075)	(90,339)	(37,336)
Net loss		$ (25,157)	$ (38,924)	$ (21,917)	$ (196,923)
Basic net income (loss) per share (in dollars per share)		$ (0.04)	$ (0.06)	$ (0.03)	$ (0.32)
Diluted net income (loss) per share (in dollars per share)		$ (0.04)	$ (0.06)	$ (0.03)	$ (0.32)
Shares used in computing basic net income (loss) per share (in shares)		664,131	629,548	659,160	619,748
Shares used in computing diluted net income (loss) per share (in shares)		664,131	629,548	659,160	619,748

[1] Amounts include amortization of purchased intangibles from business combinations, as follows: Three Months Ended October 31, Nine Months Ended October 31, 2015 2014 2015 2014Cost of revenues$20,296 $20,351 $60,825 $70,294Marketing and sales18,966 15,095 57,995 44,708Other non-operating expense761 0 2,877 0

[2] Amounts include stock-based expense, as follows: Three Months Ended October 31, Nine Months Ended October 31, 2015 2014 2015 2014Cost of revenues$17,516 $14,118 $49,237 $38,905Research and development31,534 26,868 96,508 87,264Marketing and sales69,561 72,892 211,819 210,510General and administrative25,706 25,582 77,092 76,284

[3] Amount includes approximately $10.2 million loss on conversions of our convertible 0.75% senior notes due January 2015 recognized during the nine months ended October 31, 2014.

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Debt

9 Months Ended

Oct. 31, 2015

Debt Disclosure [Abstract]

Debt

Debt

Convertible Senior Notes

	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(In thousands)						October 31, 2015		January 31, 2015
0.25% Convertible Senior Notes due April 1, 2018	$	1,150,000	$	122,421	(1)	$	1,088,910	$	1,070,692

___________ 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	As of
	October 31, 2015			January 31, 2015
Liability component :
Principal:
0.25% Senior Notes (1)	$	1,150,000		$	1,150,000
Less: debt discount, net
0.25% Senior Notes (2)	(61,090		)	(79,308		)
Net carrying amount	$	1,088,910		$	1,070,692

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

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

The total estimated fair value of the Company’s 0.25% Senior Notes at October 31, 2015 was $1.5 billion. The fair value was determined based on the closing trading price per $100 of the 0.25% Senior Notes as of the last day of trading for the third quarter of fiscal 2016.

Based on the closing price of the Company’s common stock of $77.71 on October 30, 2015, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $195.1 million. Based on the terms of the 0.25% Senior Notes, the Senior Notes were not convertible for the three months ended October 31, 2015.

Note Hedges

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

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

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

Warrants

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

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

Revolving Credit Facility

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

The Credit Agreement contains certain customary affirmative and negative covenants, including a consolidated leverage ratio covenant, a consolidated interest coverage ratio covenant, a limit on the Company’s ability to incur additional indebtedness, dispose of assets, make certain acquisition transactions, pay dividends or distributions, and certain other restrictions on the Company’s activities each defined specifically in the Credit Agreement. The Company was in compliance with the Credit Agreement’s covenants as of October 31, 2015.

In March 2015, the Company paid down $300.0 million of outstanding borrowings under the Credit Facility. There are currently no outstanding borrowings held under the Credit Facility as of October 31, 2015.

The weighted average interest rate on borrowings under the Credit Facility was 1.6% for the period beginning in October 2014 and ended March 31, 2015. The Company continues to pay a fee of 0.15% on the undrawn amount of the Credit Facility.

Loan Assumed on 50 Fremont

The Company assumed a $200.0 million loan with the acquisition of 50 Fremont (the “Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. The Loan initially requires interest only payments. Beginning in fiscal year 2019, principal and interest payments are required, with the remaining principal due at maturity. For the three and nine months ended October 31, 2015, total interest expense recognized was $1.9 million and $5.4 million, respectively. The Loan can be prepaid at any time subject to a yield maintenance fee. The agreement governing the Loan contains certain customary affirmative and negative covenants that the Company was in compliance with as of October 31, 2015.

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

The following table sets forth total interest expense recognized related to the 0.25% Senior Notes, the Credit Facility and the Loan prior to capitalization of interest (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Contractual interest expense	$	2,843	$	2,190	$	9,036	$	7,777
Amortization of debt issuance costs	1,027		1,132		3,077		3,490
Amortization of debt discount	6,148		8,637		18,317		28,837
	$	10,018	$	11,959	$	30,430	$	40,104

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Business Combinations

9 Months Ended

Oct. 31, 2015

Business Combinations [Abstract]

Business Combinations

Business Combinations

50 Fremont

In February 2015, the Company acquired 50 Fremont Street, a 41-story building totaling approximately 817,000 rentable square feet located in San Francisco, California (“50 Fremont”). At the time of the acquisition, the Company was leasing approximately 500,000 square feet of the available space in 50 Fremont. As of October 31, 2015, the Company occupied approximately 567,000 square feet. The Company acquired 50 Fremont for the purpose of expanding its global headquarters in San Francisco. Pursuant to the acquisition agreement, the Company also acquired existing third-party leases and other intangible property, terminated the Company’s existing office leases with the seller and assumed the seller's outstanding loan on 50 Fremont. In accordance with Accounting Standards Codification 805 (“ASC 805”), Business Combinations, the Company accounted for the building purchase as a business combination.

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

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

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

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

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

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

Other Business Combinations

During the nine months ended October 31, 2015, the Company acquired several companies for an aggregate of $60.1 million in cash, net of cash acquired, and has included the financial results of these companies in its condensed consolidated financial statements from the respective dates of acquisition. The Company accounted for these transactions as business combinations. In allocating the purchase consideration for each company based on estimated fair values, the Company recorded $66.4 million of goodwill. Some of the goodwill balance associated with these transactions is deductible for U.S. income tax purposes. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

Goodwill

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

Goodwill consisted of the following (in thousands):

Balance as of January 31, 2015	$	3,782,660
Other business combinations	66,394
Balance as of October 31, 2015	$	3,849,054

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Property and Equipment (Tables)

9 Months Ended

Oct. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property And Equipment

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

	As of
	October 31, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	614,349			125,289
Computers, equipment and software	1,259,210			1,171,762
Furniture and fixtures	77,606			71,881
Leasehold improvements	450,565			376,761
	$	2,585,618		$	1,745,693
Less accumulated depreciation and amortization	(843,476		)	(619,827		)
	$	1,742,142		$	1,125,866

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Related-Party Transactions

9 Months Ended

Oct. 31, 2015

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

In January 1999, the Salesforce.com Foundation, also referred to as the Foundation, was chartered on an idea of leveraging the Company’s people, technology, and resources to help improve communities around the world. The Company calls this integrated philanthropic approach the 1-1-1 model. Beginning in 2008, Salesforce.org, which is a non-profit mutual benefit corporation, was established to resell the Company's services to nonprofit organizations and certain higher education organizations.

The Company’s chairman is the chairman of both the Foundation and Salesforce.org. The Company’s chairman holds one of the three Foundation board seats. The Company’s chairman, one of the Company’s employees and one of the Company’s board members hold three of Salesforce.org’s ten board seats. The Company does not control the Foundation’s or Salesforce.org's activities, and accordingly, the Company does not consolidate either of the related entities' statement of activities with its financial results.

Since the Foundation’s and Salesforce.org’s inception, the Company has provided at no charge certain resources to those entities employees such as office space, furniture, equipment, facilities, services, and other resources. The value of these items was approximately $0.9 million for the nine months ended October 31, 2015.

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

Additionally, the Company has donated subscriptions of the Company’s services to other qualified non-profit organizations. The Company also allows Salesforce.org to resell the Company’s service to non-profit organizations and certain education entities. The Company does not charge Salesforce.org for these subscriptions, therefore revenue from subscriptions provided to non-profit organizations is donated back to the community through charitable grants made by the Foundation and Salesforce.org. The reseller agreement was amended in August 2015 to include additional customer segments and certain customers outside the U.S. and in October 2015 to add an addendum with model clauses for the processing of personal data transferred from the European Economic Area. The value of the subscriptions pursuant to reseller agreements was approximately $48.2 million for the nine months ended October 31, 2015. The Company plans to continue these programs.

The Company has committed to donate $4.0 million to the Foundation to further support its philanthropic mission. This amount will be paid to the Foundation during this fiscal year.

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Income Taxes

9 Months Ended

Oct. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year to date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the nine months ended October 31, 2015, the Company reported a tax provision of $90.3 million on a pretax income of $68.4 million, which resulted in an effective tax rate of 132 percent. The tax provision recorded was related to income taxes in profitable jurisdictions outside of the United States and the current tax expense in the United States. The Company had U.S. current tax expense as a result of forecasted taxable income before considering certain excess tax benefits from stock options and vesting of restricted stock.

The U.S. Tax Court (“Tax Court”) recently issued an opinion favorable to Altera Corporation (“Altera”) with respect to Altera’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement with Altera’s foreign subsidiary. In its opinion, the Tax Court accepted Altera’s position of excluding stock-based compensation from its inter-company cost-sharing arrangement. Once the final decision is issued by the Tax Court, the IRS could still appeal such decision; as a result, the Company will continue to monitor this matter and the related potential impacts to its financial statements. During the quarter ended October 31, 2015, the Company amended its inter-company cost-sharing arrangement to exclude stock-based compensation expense beginning in fiscal 2016 and accordingly, the Company recognized the related tax impact through its year-to-date tax provision.  

For the nine months ended October 31, 2014, the Company reported a tax provision of $37.3 million on a pretax loss of $159.6 million, which resulted in a negative effective tax rate of 23 percent. The tax provision recorded was primarily related to income taxes in profitable jurisdictions outside the United States.

Tax Benefits Related to Stock-Based Compensation

The total income tax benefit related to stock-based awards was $130.8 million and $125.7 million for nine months ended October 31, 2015 and 2014, respectively, the majority of which was not recognized as a result of the valuation allowance.

Unrecognized Tax Benefits and Other Considerations

The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Germany, Switzerland and the United Kingdom. To date, the Company has not received any proposed adjustments that would result in a material impact to its income tax provision.

The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. However, the outcome of the tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future. Based on the information to-date, as some of the ongoing examinations are completed and tax positions in these tax years meet the conditions of being effectively settled, the Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits up to approximately $32.0 million may occur in the next 12 months.

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Other Balance Sheet Accounts - Schedule of Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Payables and Accruals [Abstract]
Accounts payable	$ 88,755	$ 95,537
Accrued compensation	415,958	457,102
Accrued other liabilities	424,004	321,032
Accrued income and other taxes payable	154,020	184,844
Accrued professional costs	31,234	16,889
Customer liability, current	10,315	13,084
Accrued rent	13,477	14,847
Financing obligation, building in progress-leased facility, current	11,930	0
Accrued expenses and other current liabilities	$ 1,149,693	$ 1,103,335

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Other Balance Sheet Accounts

9 Months Ended

Oct. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other Balance Sheet Accounts

Other Balance Sheet Accounts

Prepaid Expenses and Other Current Assets

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, net	$	42,605	$	35,528
Prepaid income taxes	23,167		21,514
Customer contract asset	3,572		16,620
Other taxes receivable	32,187		27,540
Prepaid expenses and other current assets	210,378		179,352
	$	311,909	$	280,554

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

Capitalized Software, net

Capitalized software consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $172,728 and $136,314, respectively	$	114,058	$	96,617
Acquired developed technology, net of accumulated amortization of $459,215 and $392,736, respectively	282,955		336,781
	$	397,013	$	433,398

Capitalized internal-use software amortization expense totaled $12.9 million and $9.5 million for the three months ended October 31, 2015 and 2014, respectively, and totaled $36.4 million and $26.2 million for the nine months ended October 31, 2015 and 2014, respectively. Acquired developed technology amortization expense totaled $22.1 million and $22.5 million for the three months ended October 31, 2015 and 2014, respectively, and totaled $66.5 million and $75.9 million for the nine months ended October 31, 2015 and 2014, respectively.

The Company capitalized $1.3 million and $1.5 million of stock-based expenses related to capitalized internal-use software development during the three months ended October 31, 2015 and 2014, respectively, and $4.4 million and $3.6 million for the nine months ended October 31, 2015 and 2014, respectively.

Other Assets, net

Other assets consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	7,236	$	9,275
Long-term deposits	20,126		19,715
Purchased intangible assets, net of accumulated amortization of $191,807 and $130,968, respectively	277,898		329,971
Acquired intellectual property, net of accumulated amortization of $20,837 and $15,695, respectively	12,167		15,879
Customer contract asset	115		1,447
Other	79,185		76,259
	$	396,727	$	452,546

Purchased intangible assets amortization expense for the three months ended October 31, 2015 and 2014 was $20.1 million and $14.9 million, respectively and for the nine months ended October 31, 2015 and 2014 was $60.8 million and $44.9 million, respectively. Acquired intellectual property amortization expense for the three months ended October 31, 2015 and 2014 was $1.7 million and $1.2 million, respectively and for the nine months ended October 31, 2015 and 2014 was $5.1 million and $3.6 million, respectively.

Accounts Payable, Accrued Expenses and Other Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Accounts payable	$	88,755	$	95,537
Accrued compensation	415,958		457,102
Accrued other liabilities	424,004		321,032
Accrued income and other taxes payable	154,020		184,844
Accrued professional costs	31,234		16,889
Customer liability, current (1)	10,315		13,084
Accrued rent	13,477		14,847
Financing obligation, building in progress-leased facility, current	11,930		0
	$	1,149,693	$	1,103,335

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

Other Noncurrent Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	113,801	$	94,396
Customer liability, noncurrent	81		1,026
Financing obligation, building in progress-leased facility	194,350		125,289
Long-term lease liabilities and other	569,816		701,612
	$	878,048	$	922,323

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Stockholders' Equity

9 Months Ended

Oct. 31, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

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

As of October 31, 2015, $74.4 million has been withheld on behalf of employees for future purchases under the ESPP and is recorded in accounts payable, accrued expenses and other liabilities.

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

Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	38,833,915		0		0.00
2014 Inducement Equity Incentive Plan	222,281		0		0.00
Options granted under all plans	(1,243,913	)	1,243,913		70.06
Restricted stock activity	(1,717,493	)	0		0.00
Stock grants to board and advisory board members	(147,305	)	0		0.00
Exercised	0		(7,139,738	)	34.67
Plan shares expired	(1,533,380	)	0		0.00
Canceled	1,623,954		(1,623,954	)	46.33
Balance as of October 31, 2015	66,827,597		21,938,582		$	48.82	$	633,719,094
Vested or expected to vest			20,636,830		$	48.30	$	606,931,261
Exercisable as of October 31, 2015			7,999,144		$	37.53	$	321,427,698

The total intrinsic value of the options exercised during the nine months ended October 31, 2015 and 2014 was $251.3 million and $202.0 million, respectively. The intrinsic value is the difference between the current market value of the stock and the exercise price of the stock option.

The weighted-average remaining contractual life of vested and expected to vest options is approximately 4.5 years.

As of October 31, 2015, options to purchase 7,999,144 shares were vested at a weighted average exercise price of $37.53 per share and had a remaining weighted-average contractual life of approximately 2.9 years. The total intrinsic value of these vested options as of October 31, 2015 was $321.4 million.

The following table summarizes information about stock options outstanding as of October 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $29.38	3,115,316	2.3	$	24.20	2,756,842	$	24.42
$29.67 to $39.09	4,239,789	2.1	37.94		2,856,120	37.86
$40.19 to $52.14	567,287	4.3	43.27		212,321	43.57
$52.30	4,107,344	5.1	52.30		1,693,467	52.30
$53.60 to $57.79	1,572,567	5.6	55.24		424,396	55.15
$59.34	6,561,546	6.1	59.34		0	0.00
$59.37 to $77.37	1,774,733	6.3	67.22		55,998	62.64
	21,938,582	4.5	$	48.82	7,999,144	$	37.53

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	2,714,178		0.001
Canceled	(2,296,785	)	0.001
Vested and converted to shares	(6,052,630	)	0.001
Balance as of October 31, 2015	17,508,771		$	0.001	$	1,360,607
Expected to vest	15,326,839				$	1,191,049

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

The weighted-average grant date fair value of the restricted stock issued for the nine months ended October 31, 2015 and 2014 was $70.26 and $58.84, respectively.

Common Stock

The following number of shares of common stock were reserved and available for future issuance at October 31, 2015:

Options outstanding	21,938,582
Restricted stock awards and units outstanding	17,508,771
Stock available for future grant:
2013 Equity Incentive Plan	66,132,255
2014 Inducement Equity Incentive Plan	695,342
Amended and Restated 2004 Employee Stock Purchase Plan	8,259,824
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	149,152,534

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Earnings/Loss Per Share

9 Months Ended

Oct. 31, 2015

Earnings Per Share [Abstract]

Earnings/Loss Per Share

Earnings/Loss Per Share

Basic earnings/loss per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the fiscal period. Diluted earnings/loss per share is computed by giving effect to all potential weighted average dilutive common stock, including options, restricted stock units, warrants and the convertible senior notes. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three and nine months ended October 31, 2015 and 2014 is the same as basic loss per share as there is a net loss in the period and inclusion of potentially issuable shares is anti-dilutive.

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2015			2014			2015			2014
Numerator:
Net loss	$	(25,157	)	$	(38,924	)	$	(21,917	)	$	(196,923	)
Denominator:
Weighted-average shares outstanding for basic loss per share	664,131			629,548			659,160			619,748
Effect of dilutive securities:
Convertible senior notes	0			0			0			0
Employee stock awards	0			0			0			0
Warrants	0			0			0			0
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share	664,131			629,548			659,160			619,748

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

	Three Months Ended October 31,		Nine Months Ended October 31,
	2015	2014	2015	2014
Stock awards	20,191	19,922	22,634	20,115
Convertible senior notes	17,309	25,820	17,309	28,834
Warrants	17,309	44,253	17,309	44,253

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Stockholders' Equity - Stock Options Outstanding (Detail)	9 Months Ended
	Oct. 31, 2015 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Number Outstanding | shares	21,938,582
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	4 years 6 months
Weighted- Average Exercise Price, Options Outstanding	$ 48.82
Options Exercisable, Number of Shares | shares	7,999,144
Options Exercisable, Weighted- Average Exercise Price	$ 37.53
$0.86 to $29.38
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	0.86
Range of Exercise Prices, Maximum	$ 29.38
Options, Number Outstanding | shares	3,115,316
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	2 years 3 months 18 days
Weighted- Average Exercise Price, Options Outstanding	$ 24.20
Options Exercisable, Number of Shares | shares	2,756,842
Options Exercisable, Weighted- Average Exercise Price	$ 24.42
$29.67 to $39.09
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	29.67
Range of Exercise Prices, Maximum	$ 39.09
Options, Number Outstanding | shares	4,239,789
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	2 years 1 month 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 37.94
Options Exercisable, Number of Shares | shares	2,856,120
Options Exercisable, Weighted- Average Exercise Price	$ 37.86
$40.19 to $52.14
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	40.19
Range of Exercise Prices, Maximum	$ 52.14
Options, Number Outstanding | shares	567,287
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	4 years 3 months 18 days
Weighted- Average Exercise Price, Options Outstanding	$ 43.27
Options Exercisable, Number of Shares | shares	212,321
Options Exercisable, Weighted- Average Exercise Price	$ 43.57
$52.30
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	52.30
Range of Exercise Prices, Maximum	$ 52.30
Options, Number Outstanding | shares	4,107,344
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	5 years 1 month 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 52.30
Options Exercisable, Number of Shares | shares	1,693,467
Options Exercisable, Weighted- Average Exercise Price	$ 52.30
$53.60 to $57.79
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	53.60
Range of Exercise Prices, Maximum	$ 57.79
Options, Number Outstanding | shares	1,572,567
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	5 years 7 months 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 55.24
Options Exercisable, Number of Shares | shares	424,396
Options Exercisable, Weighted- Average Exercise Price	$ 55.15
$59.34
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	59.34
Range of Exercise Prices, Maximum	$ 59.34
Options, Number Outstanding | shares	6,561,546
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 1 month 6 days
Weighted- Average Exercise Price, Options Outstanding	$ 59.34
Options Exercisable, Number of Shares | shares	0
Options Exercisable, Weighted- Average Exercise Price	$ 0.00
$59.37 to $77.37
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	59.37
Range of Exercise Prices, Maximum	$ 77.37
Options, Number Outstanding | shares	1,774,733
Weighted- Average Remaining Contractual Life (Years), Options Outstanding	6 years 3 months 18 days
Weighted- Average Exercise Price, Options Outstanding	$ 67.22
Options Exercisable, Number of Shares | shares	55,998
Options Exercisable, Weighted- Average Exercise Price	$ 62.64

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Stockholders' Equity - Shares of Common Stock Available for Future Issuance under Stock Option Plans (Detail) - shares	Oct. 31, 2015	Jan. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (in shares)	21,938,582	29,458,361
Restricted stock awards and units outstanding (in shares)	17,508,771
Stock available for future grant (in shares)	66,827,597	30,789,538
Convertible senior notes (in shares)	17,308,880
Warrants (in shares)	17,308,880
Total shares available for future grant (in shares)	149,152,534
2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	66,132,255
2014 Inducement Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	695,342
Amended and Restated 2004 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock available for future grant (in shares)	8,259,824

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Stockholders' Equity - Stock Activity (Detail)	9 Months Ended
	Oct. 31, 2015 USD ($) $ / shares shares
Shares available for grant
Shares Available for Grant, Balance	30,789,538
Shares Available for Grant, Options granted under all plans	(1,243,913)
Shares Available for Grant, Exercised	0
Shares Available for Grant, Expired	(1,533,380)
Shares Available for Grant, Cancelled	1,623,954
Shares Available for Grant, Balance	66,827,597
Outstanding Stock Options
Outstanding Stock Options, Balance	29,458,361
Outstanding Stock Options	1,243,913
Outstanding Stock Options, Exercised	(7,139,738)
Outstanding Stock Options, Plan shares expired	0
Outstanding Stock Options, Cancelled	(1,623,954)
Outstanding Stock Options, Balance	21,938,582
Outstanding Stock Options, Vested or expected to vest	20,636,830
Outstanding Stock Options, Exercisable	7,999,144
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Balance | $ / shares	$ 44.36
Weighted- Average Exercise Price, Options | $ / shares	70.06
Weighted- Average Exercise Price, Exercised | $ / shares	34.67
Weighted- Average Exercise Price, Cancelled | $ / shares	46.33
Weighted- Average Exercise Price, Expired | $ / shares	0.00
Weighted- Average Exercise Price, Balance | $ / shares	48.82
Weighted- Average Exercise Price, Vested or expected to vest | $ / shares	48.30
Weighted- Average Exercise Price, Exercisable | $ / shares	$ 37.53
Aggregate Intrinsic Value
Weighted- Average Exercise Price, Balance | $	$ 633,719,094
Weighted- Average Exercise Price, Vested or expected to vest | $	606,931,261
Weighted- Average Exercise Price, Exercisable | $	$ 321,427,698
Restricted Stock Activity
Shares available for grant
Shares Available for Grant, Restricted stock activity	(1,717,493)
Outstanding Stock Options
Outstanding Stock Options	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares	$ 0.00
Stock Grants To Board And Advisory Board Members
Shares available for grant
Shares Available for Grant, Stock grants to board and advisory board members	(147,305)
Outstanding Stock Options
Outstanding Stock Options	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares	$ 0.00
2013 Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	38,833,915
Shares Available for Grant, Balance	66,132,255
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares	$ 0.00
2014 Inducement Equity Incentive Plan
Shares available for grant
Shares Available for Grant, Increase in shares authorized	222,281
Shares Available for Grant, Balance	695,342
Outstanding Stock Options
Outstanding Stock Options, Increase in shares authorized	0
Options Outstanding Weighted-Average Exercise Price
Weighted- Average Exercise Price, Options | $ / shares	$ 0.00

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Investments - Schedule of Marketable Securities (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,078,850	$ 977,954
Unrealized Gains	1,540	5,182
Unrealized Losses	(2,402)	(969)
Fair Value	1,077,988	982,167
Corporate notes and obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	636,779	605,724
Unrealized Gains	905	3,031
Unrealized Losses	(1,678)	(481)
Fair Value	636,006	608,274
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	126,837	73,226
Unrealized Gains	149	257
Unrealized Losses	(42)	(1)
Fair Value	126,944	73,482
Mortgage backed obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	84,288	44,181
Unrealized Gains	94	159
Unrealized Losses	(401)	(415)
Fair Value	83,981	43,925
Asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	176,633	120,049
Unrealized Gains	73	131
Unrealized Losses	(240)	(43)
Fair Value	176,466	120,137
Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	36,358	36,447
Unrealized Gains	141	115
Unrealized Losses	(30)	(25)
Fair Value	36,469	36,537
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,094	12,023
Unrealized Gains	16	278
Unrealized Losses	(2)	0
Fair Value	2,108	12,301
U.S. agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	8,998	19,488
Unrealized Gains	5	26
Unrealized Losses	(9)	(4)
Fair Value	8,994	19,510
Covered bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	6,863	66,816
Unrealized Gains	157	1,185
Unrealized Losses	0	0
Fair Value	$ 7,020	$ 68,001

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Debt - Schedule of Conversion of Senior Notes to Common Stock (Detail) - Convertible Debt - 0.25% Convertible Senior Notes due April 1, 2018	9 Months Ended
	Oct. 31, 2015 $ / shares
Debt Instrument [Line Items]
Conversion Rate per $1,000 Par Value	0.0150512
Initial Conversion Price per Share	$ 66.44

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Summary of Business and Significant Accounting Policies (Tables)

9 Months Ended

Oct. 31, 2015

Accounting Policies [Abstract]

Revenues By Geographical Region

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2015		2014		2015		2014
Americas	$	1,258,148	$	995,331	$	3,575,441	$	2,812,654
Europe	302,704		252,982		848,413		730,324
Asia Pacific	151,115		135,342		433,964		386,000
	$	1,711,967	$	1,383,655	$	4,857,818	$	3,928,978

Schedule Of Property And Equipment Estimated Useful Lives

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

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	The remaining lease term or up to 10 years

Schedule Of Assumptions Used To Calculate Fair Value Of Options Granted

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

	Three Months Ended   October 31,						Nine Months Ended   October 31,
Stock Options	2015			2014			2015			2014
Volatility	35		%	37		%	35-37		%	37		%
Estimated life	3.6 years			3.5 years			3.6 years			3.5 years
Risk-free interest rate	1.21-1.27		%	1.34-1.53		%	1.13-1.42		%	1.20-1.53		%
Weighted-average fair value per share of grants	$	19.72		$	17.32		$	19.79		$	16.46

	Three Months Ended   October 31,		Nine Months Ended   October 31,
ESPP	2015	2014	2015			2014
Volatility	n/a	n/a	34		%	34-35		%
Estimated life	n/a	n/a	0.75 years			0.75 years
Risk-free interest rate	n/a	n/a	0.06-0.27		%	0.07-0.16		%
Weighted-average fair value per share of grants	n/a	n/a	$	19.30		$	14.53

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Other Balance Sheet Accounts (Tables)

9 Months Ended

Oct. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, net	$	42,605	$	35,528
Prepaid income taxes	23,167		21,514
Customer contract asset	3,572		16,620
Other taxes receivable	32,187		27,540
Prepaid expenses and other current assets	210,378		179,352
	$	311,909	$	280,554

Schedule of Capitalized Software Costs

Capitalized software consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Capitalized internal-use software development costs, net of accumulated amortization of $172,728 and $136,314, respectively	$	114,058	$	96,617
Acquired developed technology, net of accumulated amortization of $459,215 and $392,736, respectively	282,955		336,781
	$	397,013	$	433,398

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes, noncurrent, net	$	7,236	$	9,275
Long-term deposits	20,126		19,715
Purchased intangible assets, net of accumulated amortization of $191,807 and $130,968, respectively	277,898		329,971
Acquired intellectual property, net of accumulated amortization of $20,837 and $15,695, respectively	12,167		15,879
Customer contract asset	115		1,447
Other	79,185		76,259
	$	396,727	$	452,546

Schedule of Accrued Expenses and Other Current Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Accounts payable	$	88,755	$	95,537
Accrued compensation	415,958		457,102
Accrued other liabilities	424,004		321,032
Accrued income and other taxes payable	154,020		184,844
Accrued professional costs	31,234		16,889
Customer liability, current (1)	10,315		13,084
Accrued rent	13,477		14,847
Financing obligation, building in progress-leased facility, current	11,930		0
	$	1,149,693	$	1,103,335

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

Schedule of Other Noncurrent Liabilities

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

	As of
	October 31, 2015		January 31, 2015
Deferred income taxes and income taxes payable	$	113,801	$	94,396
Customer liability, noncurrent	81		1,026
Financing obligation, building in progress-leased facility	194,350		125,289
Long-term lease liabilities and other	569,816		701,612
	$	878,048	$	922,323

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Debt - Summary of Convertible Senior Notes (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015	Mar. 31, 2013
Debt Conversion [Line Items]
Convertible 0.25% senior notes, net	$ 1,088,910	$ 1,070,692
Convertible Debt | 0.25% Convertible Senior Notes due April 1, 2018
Debt Conversion [Line Items]
Par Value Outstanding	1,150,000
Equity Component Recorded at Issuance	122,421
Convertible 0.25% senior notes, net	$ 1,088,910	$ 1,070,692
Contractual interest rate	0.25%		0.25%

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Investments - Effect of Derivative Instruments Not Designated as Hedging Instruments on Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Derivatives not designated as hedging instruments | Foreign currency derivative contracts | Other income (expense)
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative Instruments Recognized in Income	$ (2,888)	$ (3,068)	$ 9,773	$ (2,964)

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Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Stock-based expenses	$ 144,317	$ 139,460	$ 434,656	$ 412,963
Loss on conversions of convertible senior notes	0	1,340	0	10,230
Cost of revenues
Amortization of purchased intangibles from business combinations	20,296	20,351	60,825	70,294
Stock-based expenses	17,516	14,118	49,237	38,905
Marketing and sales
Amortization of purchased intangibles from business combinations	18,966	15,095	57,995	44,708
Stock-based expenses	69,561	72,892	211,819	210,510
Research and development
Stock-based expenses	31,534	26,868	96,508	87,264
Other non-operating expense
Amortization of purchased intangibles from business combinations	761	0	2,877	0
General and administrative
Stock-based expenses	$ 25,706	$ 25,582	$ 77,092	76,284
Notes Payable to Banks | 0.75% Convertible Senior Notes due January 2015
Loss on conversions of convertible senior notes				$ 10,200
Interest percentage of convertible senior notes		0.75%		0.75%

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Property and Equipment

9 Months Ended

Oct. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and Equipment

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

	As of
	October 31, 2015			January 31, 2015
Land	$	183,888		$	0
Buildings	614,349			125,289
Computers, equipment and software	1,259,210			1,171,762
Furniture and fixtures	77,606			71,881
Leasehold improvements	450,565			376,761
	$	2,585,618		$	1,745,693
Less accumulated depreciation and amortization	(843,476		)	(619,827		)
	$	1,742,142		$	1,125,866

Depreciation and amortization expense totaled $77.4 million and $64.6 million during the three months ended October 31, 2015 and 2014, respectively, and totaled $226.6 million and $181.7 million during the nine months ended October 31, 2015 and 2014, respectively.

Computers, equipment and software at October 31, 2015 and January 31, 2015 included a total of $743.3 million and $734.7 million acquired under capital lease agreements, respectively. Accumulated amortization relating to computers, equipment and software under capital leases totaled $285.4 million and $206.7 million, respectively, at October 31, 2015 and January 31, 2015. Amortization of assets under capital leases is included in depreciation and amortization expense.

In October 2015, the Company sold approximately 8.8 net acres of undeveloped real estate and the associated perpetual parking rights in San Francisco, California, which were classified as held for sale. The total proceeds from the sale were $157.1 million, of which the Company received $127.1 million during the three months ended October 31, 2015 and previously received a nonrefundable deposit in the amount of $30.0 million during the three months ended April 30, 2014. The Company recognized a gain of $21.8 million, net of closing costs, on the sale of this portion of the Company’s land and building improvements and perpetual parking rights.

In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street (“350 Mission”) in San Francisco, California. The space rented is for the total office space available in the building. As a result of the Company’s involvement during the building's construction, the Company is considered for accounting purposes to be the owner of the building. As of October 31, 2015, the Company had capitalized $175.9 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $11.9 million and $194.4 million, respectively. The financing obligation carrying value also includes $25.0 million of tenant improvement obligations and approximately $5.7 million of imputed interest. The total expected financing obligation associated with this lease upon completion of the construction of the building, inclusive of the amounts currently recorded, is $335.5 million, including interest (see Note 10 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord in phases as the office space becomes ready for occupancy. To the extent that operating expenses for 350 Mission are material, the Company, as the deemed accounting owner, will record the operating expenses. In April 2015, the building was placed into service and depreciation commenced.

There was no impairment of long-lived assets during the three and nine months ended October 31, 2015 and 2014, respectively.

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Other Balance Sheet Accounts - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Purchased intangible assets
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	$ 20.1	$ 14.9	$ 60.8	$ 44.9
Acquired intellectual property
Finite-Lived Intangible Assets [Line Items]
Amortization of acquired intangible assets	1.7	1.2	5.1	3.6
Capitalized internal-use software development costs
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	12.9	9.5	36.4	26.2
Capitalized stock based compensation	1.3	1.5	4.4	3.6
Acquired developed technology
Finite-Lived Intangible Assets [Line Items]
Capitalized software amortization expense	$ 22.1	$ 22.5	$ 66.5	$ 75.9

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Earnings/Loss Per Share - Shares Excluded from Diluted Earnings or Loss Per Share (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
Stock Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	20,191	19,922	22,634	20,115
Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	17,309	25,820	17,309	28,834
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded	17,309	44,253	17,309	44,253

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Stockholders' Equity (Tables)

9 Months Ended

Oct. 31, 2015

Equity [Abstract]

Schedule Of Stock Activity

Stock activity excluding the ESPP is as follows:

			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of January 31, 2015	30,789,538		29,458,361		$	44.36
Increase in shares authorized:
2013 Equity Incentive Plan	38,833,915		0		0.00
2014 Inducement Equity Incentive Plan	222,281		0		0.00
Options granted under all plans	(1,243,913	)	1,243,913		70.06
Restricted stock activity	(1,717,493	)	0		0.00
Stock grants to board and advisory board members	(147,305	)	0		0.00
Exercised	0		(7,139,738	)	34.67
Plan shares expired	(1,533,380	)	0		0.00
Canceled	1,623,954		(1,623,954	)	46.33
Balance as of October 31, 2015	66,827,597		21,938,582		$	48.82	$	633,719,094
Vested or expected to vest			20,636,830		$	48.30	$	606,931,261
Exercisable as of October 31, 2015			7,999,144		$	37.53	$	321,427,698

Schedule Of Stock Options Outstanding

The following table summarizes information about stock options outstanding as of October 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
$0.86 to $29.38	3,115,316	2.3	$	24.20	2,756,842	$	24.42
$29.67 to $39.09	4,239,789	2.1	37.94		2,856,120	37.86
$40.19 to $52.14	567,287	4.3	43.27		212,321	43.57
$52.30	4,107,344	5.1	52.30		1,693,467	52.30
$53.60 to $57.79	1,572,567	5.6	55.24		424,396	55.15
$59.34	6,561,546	6.1	59.34		0	0.00
$59.37 to $77.37	1,774,733	6.3	67.22		55,998	62.64
	21,938,582	4.5	$	48.82	7,999,144	$	37.53

Schedule Of Restricted Stock Activity

Restricted stock activity is as follows:

	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2015	23,144,008		$	0.001
Granted	2,714,178		0.001
Canceled	(2,296,785	)	0.001
Vested and converted to shares	(6,052,630	)	0.001
Balance as of October 31, 2015	17,508,771		$	0.001	$	1,360,607
Expected to vest	15,326,839				$	1,191,049

Schedule Of Shares Of Common Stock Available For Future Issuance Under Stock Option Plans

The following number of shares of common stock were reserved and available for future issuance at October 31, 2015:

Options outstanding	21,938,582
Restricted stock awards and units outstanding	17,508,771
Stock available for future grant:
2013 Equity Incentive Plan	66,132,255
2014 Inducement Equity Incentive Plan	695,342
Amended and Restated 2004 Employee Stock Purchase Plan	8,259,824
Convertible Senior Notes	17,308,880
Warrants	17,308,880
	149,152,534

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Investments - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015
Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 648,200	$ 601,600
Recurring measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		68,001
Total Assets	1,660,918	1,299,248
Total Liabilities	5,996	5,694
Recurring measurement | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		0
Total Assets	339,446	13,983
Total Liabilities	0	0
Recurring measurement | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		68,001
Total Assets	1,321,472	1,285,265
Total Liabilities	5,996	5,694
Recurring measurement | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		0
Total Assets	0	0
Total Liabilities	0	0
Recurring measurement | Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	7,789	10,611
Recurring measurement | Prepaid expenses and other current assets | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Prepaid expenses and other current assets | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	7,789	10,611
Recurring measurement | Prepaid expenses and other current assets | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Accounts payable, accrued expenses and other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	5,996	5,694
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	5,996	5,694
Recurring measurement | Accounts payable, accrued expenses and other liabilities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivative contracts	0	0
Recurring measurement | Time deposits | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	235,695	292,487
Recurring measurement | Time deposits | Cash and cash equivalents | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Time deposits | Cash and cash equivalents | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	235,695	292,487
Recurring measurement | Time deposits | Cash and cash equivalents | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Money market mutual funds | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	339,446	13,983
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	339,446	13,983
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Money market mutual funds | Cash and cash equivalents | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Recurring measurement | Corporate notes and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	636,006	608,274
Recurring measurement | Corporate notes and obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Corporate notes and obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	636,006	608,274
Recurring measurement | Corporate notes and obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	126,944	73,482
Recurring measurement | U.S. treasury securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. treasury securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	126,944	73,482
Recurring measurement | U.S. treasury securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Mortgage backed obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	83,981	43,925
Recurring measurement | Mortgage backed obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Mortgage backed obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	83,981	43,925
Recurring measurement | Mortgage backed obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	176,466	120,137
Recurring measurement | Asset backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Asset backed securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	176,466	120,137
Recurring measurement | Asset backed securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	36,469	36,537
Recurring measurement | Municipal securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Municipal securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	36,469	36,537
Recurring measurement | Municipal securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,108	12,301
Recurring measurement | Foreign government obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | Foreign government obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,108	12,301
Recurring measurement | Foreign government obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. agency obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	8,994	19,510
Recurring measurement | U.S. agency obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring measurement | U.S. agency obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	8,994	19,510
Recurring measurement | U.S. agency obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	$ 0
Recurring measurement | Covered bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	7,020
Recurring measurement | Covered bonds | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0
Recurring measurement | Covered bonds | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	7,020
Recurring measurement | Covered bonds | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 0

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Summary of Business and Significant Accounting Policies (Policies)

9 Months Ended

Oct. 31, 2015

Accounting Policies [Abstract]

Fiscal Year

Fiscal Year

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

Basis of Presentation

Basis of Presentation

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

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

Use of Estimates

Use of Estimates

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

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

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

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

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

• the fair value of convertible notes,

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

• the useful lives of intangible assets and property and equipment,

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

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

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

Principles of Consolidation

Principles of Consolidation

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

Segments

Segments

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

Concentrations of Credit Risk and Significant Customers

Concentrations of Credit Risk and Significant Customers

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

Revenue Recognition

Revenue Recognition

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

The Company commences revenue recognition when all of the following conditions are satisfied:

• there is persuasive evidence of an arrangement;

• the service has been or is being provided to the customer;

• the collection of the fees is reasonably assured; and

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

The Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Subscription and Support Revenues

Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company’s service is made available to customers.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Professional Services and Other Revenues

The majority of the Company’s professional services contracts are on a time and material basis. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as the services are rendered for time and material contracts, and when the milestones are achieved and accepted by the customer for fixed price contracts. Training revenues are recognized as the services are performed.

Multiple Deliverable Arrangements

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

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

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

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

Deferred Revenue

Deferred Revenue

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

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

Deferred Commissions

Deferred Commissions

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

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

Cash and Cash Equivalents

Cash and Cash Equivalents

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

Marketable Securities

Marketable Securities

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

Fair Value Measurement

Fair Value Measurement

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

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

Property and Equipment

Property and Equipment

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

Computer, equipment and software	3 to 9 years
Furniture and fixtures	5 years
Leasehold improvements	The remaining lease term or up to 10 years

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

Capitalized Internal-Use Software Costs

Capitalized Internal-Use Software Costs

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

Goodwill and Intangible Assets Impairment Assessments

Goodwill and Intangible Assets Impairment Assessments

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

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

Long- Lived Assets and Impairment Assessment

Long- Lived Assets and Impairment Assessment

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

Business Combinations

Business Combinations

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

Leases and Asset Retirement Obligations

Leases and Asset Retirement Obligations

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

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

In the event the Company is the deemed owner for accounting purposes during construction, the Company records assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent it is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease.

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

Accounting for Stock-Based Compensation

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

Accounting for Stock-Based Expense

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

Income Taxes

Income Taxes

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

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

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

Foreign Currency Translation

Foreign Currency Translation

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

Warranties and Indemnification

Warranties and Indemnification

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

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

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

New Accounting Pronouncements

New Accounting Pronouncements

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

In May 2013, FASB issued Accounting Standards Update No. 2013-270, “a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)” (“ASU 2013-270”), to place leases on lessee’s balance sheets. ASU 2013-270 states a lessee would recognize a lease liability for lease payments and recognize an asset for its right to use the leased asset during the lease term. In November 2015, FASB set an effective date for annual periods after December 2018. The Company plans to adopt ASU 2013-270 in fiscal 2020 and is currently evaluating the impact to its condensed consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”) which eliminates the requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2015-16 on its condensed consolidated financial statements.

Reclassification

Reclassification

Certain reclassifications to the fiscal 2015 balances were made to conform to the current period presentation in the Balance Sheet. These reclassifications include strategic investments and other assets, net.