Table of ~~assets acquired under capital leases is included in depreciation and amortization expense.~~Contents

~~Building - 350 Mission~~

In December 2013, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street (“350 Mission”) in San Francisco, California, which is the total office space available in the building. As a result of the Company’s involvement during the construction period, the Company is considered for accounting purposes to be the owner of 350 Mission. As a result, the Company has capitalized the construction costs as Building with a corresponding current and noncurrent financing obligation liability and has accounted for the underlying land implicitly as an operating lease. As of October 31, 2017, the Company had capitalized $178.8 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $19.9 million and $198.9 million, respectively. As of January 31, 2017, the Company had capitalized $178.8 million of construction costs, based on the construction costs incurred to date by the landlord, and recorded a corresponding current and noncurrent financing obligation liability of $19.6 million and $200.7 million, respectively. The total expected financing obligation in the form of minimum lease payments inclusive of the amounts currently recorded is $306.3 million, including interest (see Note 13 “Commitments” for future commitment details). The obligation will be settled through monthly lease payments to the landlord, which commenced in October 2015. To the extent that operating expenses for 350 Mission are material, the Company, as the deemed accounting owner, will record the operating expenses.

6. Business Combinations

~~In February 2017,~~Slack Technologies, Inc.

On July 21, 2021, the Company acquired ~~Sequence, Inc. for an aggregate~~all outstanding stock of ~~$26.0 million in cash and equity, net of cash acquired, and~~Slack, a leading channel-based messaging platform. The Company has included the financial results of Slack in the ~~company in its~~condensed consolidated financial statements from the date of ~~acquisition. The costs associated with this~~ acquisition, which for the three and six months ended July 31, 2021 were not material. The transaction costs associated with the acquisition were approximately $54 million and were recorded in general and administrative expense during the six months ended July 31, 2021. The preliminary acquisition date fair value of the consideration transferred for Slack was approximately $27.1 billion, which consisted of the following (in millions):


	Fair Value
Cash	$	15,799
Common stock issued	11,064
Fair value of stock options, restricted stock units and restricted stock awards assumed	205
Total	$	27,068

The fair value of the stock options assumed by the Company ~~accounted~~was determined using the Black-Scholes option pricing model. A share conversion ratio of 0.1885 and 0.1804 was applied to convert Slack's outstanding (i) stock options and restricted stock units and (ii) restricted stock awards, respectively, into equity awards for ~~this~~shares of the Company’s common stock.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition ~~as a business combination. In allocating the~~(in millions):


	Fair Value
Cash and cash equivalents	$	1,508

Accounts receivable	97
Acquired customer contract asset	70
Operating lease right-of-use assets	208
Other assets	323

Goodwill	21,453
Intangible assets	6,140
Accounts payable, accrued expenses and other liabilities	(183)
Unearned revenue	(382)
Slack Convertible Notes (see Note 8)	(1,339)
Operating lease liabilities	(283)
Deferred tax liability	(544)
Net assets acquired	$	27,068

The excess of purchase consideration ~~based on estimated~~over the fair ~~values, the Company~~value of other assets acquired and liabilities assumed was recorded ~~$2.7 million of intangible assets and $23.0 million of~~as goodwill. The resulting goodwill ~~balance associated~~is primarily attributed to the assembled workforce and expanded market opportunities, including integrating Slack product offering with ~~this business combination is deductible~~existing Company service offerings in a digital-first, work anywhere world. The goodwill has no basis for U.S. income tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed are preliminary based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax matters are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, legal and other contingencies as of the acquisition date, income and non-income-based taxes and residual goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

Table of Contents

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


	Fair Value		Useful Life
Developed technology	$	2,360	5 years
Customer relationships	3,480		8 years
Other purchased intangible assets	300		6 years
Total intangible assets subject to amortization	$	6,140

Developed technology represents the preliminary estimated fair value of Slack's data analysis technologies. Customer relationships represent the preliminary estimated fair values of the underlying relationships with Slack customers.

The Company assumed unvested stock options, restricted stock units and restricted stock awards with a preliminary estimated fair value of $1.7 billion. Of the total consideration, $205 million was preliminarily allocated to the purchase consideration and $1.5 billion was preliminarily allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

The following pro forma financial information summarizes the combined results of operations for the Company and Slack, as though the companies were combined as of the beginning of the Company’s fiscal 2021. The unaudited pro forma financial information was as follows (in millions):


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Total revenues	$	6,557	$	5,327	$	12,743	$	10,358
Pretax income (loss)	544		373		764		(126)
Net income	369		2,253		563		1,942

The pro forma financial information for all periods presented above has been calculated after adjusting the results of Slack to reflect the business combination accounting effects resulting from this acquisition, including the fair value adjustment to revenue contracts, the amortization expense from acquired intangible assets and the stock-based compensation expense for unvested stock options, restricted stock units and restricted stock awards assumed as though the acquisition occurred as of the beginning of the Company’s fiscal year 2021. The historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s fiscal 2021.

Acumen Solutions, Inc.

In February 2021, the Company acquired all outstanding stock of Acumen Solutions, Inc. (“Acumen”), a professional services firm that provides innovative and critical solutions to clients using the Company’s service offerings and other advanced cloud technologies. The acquisition date fair value of the consideration transferred for Acumen was approximately $433 million, in cash. The Company recorded approximately $99 million for customer relationships with estimated useful lives of eight years. The Company recorded approximately $337 million of goodwill which is primarily attributed to the assembled workforce. For the goodwill balance there is no basis for U.S. income tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, legal and other contingencies as of the acquisition date, income and non-income-based taxes and residual goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

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

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7. Intangible Assets Acquired Through Business Combinations and Goodwill

Intangible ~~assets acquired through business combinations~~Assets Acquired Through Business Combinations

Intangible assets acquired through business combinations ~~are~~were as follows (in ~~thousands)~~millions):


	Intangible Assets, Gross						Accumulated Amortization						Intangible Assets, Net				Weighted Average Remaining Useful Life (Years)
	January 31, 2021		Additions and retirements, net		July 31, 2021		January 31, 2021		Expense and retirements, net		July 31, 2021		January 31, 2021		July 31, 2021		July 31, 2021
Acquired developed technology	$	3,305	$	2,360	$	5,665	$	(1,427)	$	(352)	$	(1,779)	$	1,878	$	3,886	4.1
Customer relationships	3,510		3,579		7,089		(1,279)		(251)		(1,530)		2,231		5,559		7.1
Other (1)	45		300		345		(40)		(4)		(44)		5		301		5.9
Total	$	6,860	$	6,239	$	13,099	$	(2,746)	$	(607)	$	(3,353)	$	4,114	$	9,746	5.8

Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted
Average
Remaining Useful Life
Jan 31, 2017 Additions Oct. 31, 2017 Jan 31, 2017 Expense Oct. 31, 2017 Jan 31, 2017 Oct. 31, 2017
Acquired developed technology $ 1,092,161
$ 0
$ 1,092,161
$ (577,929 ) $ (125,886 ) $ (703,815 ) $ 514,232
$ 388,346
3.0
Customer relationships 843,614
1,690
845,304
(254,035 ) (89,769 ) (343,804 ) 589,579
501,500
4.7
Trade names and trademarks 45,950
0
45,950
(41,349 ) (1,530 ) (42,879 ) 4,601
3,071
1.6
Territory rights and other 15,786
0
15,786
(12,256 ) (996 ) (13,252 ) 3,530
2,534
8.3
50 Fremont lease intangibles 7,713
0
7,713
(6,281 ) (1,115 ) (7,396 ) 1,432
317
0.3
Total $ 2,005,224
$ 1,690
$ 2,006,914
$ (891,850 ) $ (219,296 ) $ (1,111,146 ) $ 1,113,374
$ 895,768
3.9
(1) Included in other are in-place leases, trade names, trademarks and territory rights.

Amortization of intangible assets ~~and unfavorable lease liabilities, which are not reflected in the table above,~~ resulting from business combinations for the three months ended ~~October~~July 31, ~~2017~~2021 and ~~2016~~2020 was ~~$70.0~~$319 million and ~~$65.3~~$284 million, respectively, and for the ~~nine~~six months ended ~~October~~July 31, ~~2017~~2021 and ~~2016~~2020 was ~~$219.1~~$607 million and ~~$153.0~~$555 million, respectively.

The expected future amortization expense for intangible assets as of ~~October~~July 31, ~~2017 is~~2021 was as follows (in ~~thousands)~~millions):


Fiscal Period:
Remaining six months of fiscal 2022	$	1,002
Fiscal 2023	1,892
Fiscal 2024	1,806
Fiscal 2025	1,537
Fiscal 2026	1,312
Thereafter	2,197
Total amortization expense	$	9,746

Customer Contract Assets Acquired Through Business Combinations

Fiscal Period:
Remaining three months of Fiscal 2018 $ 69,053
Fiscal 2019 266,233
Fiscal 2020 225,039
Fiscal 2021 169,481
Fiscal 2022 111,353
Thereafter 54,609
Total amortization expense $ 895,768

~~Goodwill~~

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

~~The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, were as follows (in thousands):~~

Balance as of January 31, 2017 $ 7,263,846
Sequence, Inc. acquisition 22,982
Adjustments of acquisition date fair values, including the effect of foreign currency translation 7,313
Balance as of October 31, 2017 $ 7,294,141

~~8. Debt~~

~~Convertible Senior Notes~~

Par Value Outstanding
Equity
Component Recorded at Issuance
Liability Component of Par Value as of
(in thousands) October 31,
2017 January 31,
2017
0.25% Convertible Senior Notes due April 1, 2018 $ 1,149,979
$ 122,421
(1) $ 1,137,954
$ 1,116,360

~~___________~~

~~(1)~~This amount represents the equity component recorded at the initial issuance of the 0.25% convertible senior notes. As of October 31, 2017, $10.8 million was reclassified to temporary equity on the accompanying consolidated balance sheet as these notes are convertible for the three months ending October 31, 2017 based on the conversion criteria below.

In March 2013, the Company issued at par value $1.15 billion of 0.25% convertible senior notes (the “0.25% Senior Notes”, or “Notes”) due April 1, 2018, unless earlier purchased by the Company or converted and are therefore classified as current on the consolidated balance sheet as of October 31, 2017 as they are due within one year. 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 (as described in the indenture).~~

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 any period when holders of the 0.25% Senior Notes are eligible to exercise their conversion option, the equity component related to convertible debt instruments is required to be reclassified from permanent equity to temporary equity. Therefore, if in any future period the holders of the 0.25% Senior Notes are able to exercise their conversion rights, then the difference between (1) the amount of cash deliverable upon conversion (i.e., par value of debt) and (2) the carrying value of the debt component will be reclassified from permanent equity to temporary equity, and will continue to be reported as temporary equity for any period in which the debt remains currently convertible.

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 stockholders’ equity.

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

As of
October 31,
2017 January 31,
2017
Liability component:
Principal (1) $ 1,149,979
$ 1,150,000
Less: debt discount, net (2) (10,797 ) (29,954 )
Less: debt issuance cost (1,228 ) (3,686 )
Net carrying amount $ 1,137,954
$ 1,116,360

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

~~(2)~~Included in the consolidated balance sheets within Convertible 0.25% Senior Notes (which is classified as a current liability as of October 31, 2017 and a noncurrent liability as of January 31, 2017) 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, 2017 was $1.8 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 2018.

Based on the closing price of the Company’s common stock of $102.34 on October 31, 2017, the if-converted value of the 0.25% Senior Notes exceeded their principal amount by approximately $621.4 million.

During the three months ended October 31, 2017, an immaterial portion of the 0.25% Senior Notes outstanding was converted by noteholders. The Company recorded an immaterial loss during the three months ended October 31, 2017 related to the extinguishment of the 0.25% Senior Notes converted by noteholders, which represents the difference between the fair market value allocated to the liability component on settlement date and the net carrying amount of the liability component and unamortized debt issuance costs on settlement date. As of October 31, 2017 the remaining principal balance of the 0.25% Senior Notes outstanding is approximately $1.15 billion. The remaining principal balance of the 0.25% Senior Notes matures on April 1, 2018 unless earlier converted by noteholders.

~~As of the filing date of this Form 10-Q, the Company has received additional conversion notices for $26.7 million of the principal balance of the 0.25% Senior Notes.~~

~~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 (“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 (“0.25% Warrants”), whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock. If the 0.25% Warrants are not exercised on their exercise dates, which are in fiscal 2019, they will expire. If the market value per share of the Company's common stock exceeds the applicable exercise price of the 0.25% Warrants, the 0.25% Warrants will have a dilutive effect on the Company's earnings per share if the Company has achieved profitability at that time. 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.

~~Term Loan~~

In July 2016, the Company entered into a credit agreement (“Term Loan Credit Agreement”) with Bank of America, N.A. and certain other institutional lenders for a $500.0 million term loan facility (“Term Loan”) that matures on July 11, 2019. The Term Loan will bear interest, at the Company’s option, at either a base rate plus a spread of 0.00% to 0.75% or an adjusted LIBOR rate plus a spread of 1.00% to 1.75%, in each case with such spread being determined based on the Company’s consolidated leverage ratio for the preceding four fiscal quarter period.

~~In July 2016, the Company borrowed the full $500.0 million under the Term Loan. All of the net proceeds of the Term Loan were for the purpose of partially funding the acquisition of Demandware.~~

Interest on the Term Loan is due and payable in arrears quarterly for loans bearing interest at a rate based on the base rate and at the end of an interest period in the case of loans bearing interest at the adjusted LIBOR rate.

All outstanding amounts under the Term Loan Credit Agreement will be due and payable on July 11, 2019. The Company may prepay the Term Loan, in whole or in part, at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may not be reborrowed. The Company’s obligations under the Term Loan Credit Agreement are required to be guaranteed by certain of its subsidiaries meeting certain thresholds set forth in the Term Loan Credit Agreement.

The Term Loan Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions and repurchase stock. The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. The Term Loan Credit Agreement includes customary events of default. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Term Loan Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts. The occurrence of an event of default could result in the acceleration of obligations under the Term Loan Credit Agreement. The Company was in compliance with the Term Loan Credit Agreement’s covenants as of October 31, 2017.

The weighted average interest rate on the Term Loan was 2.2% for the three months ended October 31, 2017. Accrued interest on the Term Loan was $0.3 million as of October 31, 2017. As of October 31, 2017, the noncurrent outstanding principal portion was $500.0 million.

~~Revolving Credit Facility~~

In July 2016, the Company entered into an Amended and Restated Credit Agreement (“Revolving Loan Credit Agreement”) with Wells Fargo Bank, National Association, and certain other institutional lenders that provides for $1.0 billion unsecured revolving credit facility (“Credit Facility”) that matures in July 2021. The Revolving Loan Credit Agreement amended and restated the Company’s existing revolving credit facility dated October 2014. The Company may use the proceeds of future borrowings under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures and other general corporate purposes, including permitted acquisitions.

The borrowings under the Credit Facility bear interest, at the Company’s option, at a base rate plus a spread of 0.00% to 0.75% or an adjusted LIBOR rate plus a spread of 1.00% to 1.75%, in each case with such spread being determined based on the Company’s consolidated leverage ratio for the preceding four fiscal quarter period. Interest is due and payable in arrears quarterly for loans bearing interest at a rate based on the base rate and at the end of an interest period in the case of loans bearing interest at the adjusted LIBOR rate. Regardless of what amounts, if any, are outstanding under the Credit Facility, the Company is also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.125% to 0.25%, with such rate being based on the Company’s consolidated leverage ratio for the preceding four fiscal quarter period, payable in arrears quarterly.

The Revolving Loan Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions and repurchase stock. The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. The Revolving Loan Credit Agreement includes customary events of default. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Revolving Loan Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts. The occurrence of an event of default could result in the acceleration of obligations under the Revolving Loan Credit Agreement. The Company was in compliance with the Revolving Loan Credit Agreement’s covenants as of October 31, 2017.

In February 2017, the Company paid down the remaining $200.0 million of outstanding borrowings under the Credit Facility. There were no outstanding borrowings under the Credit Facility as of October 31, 2017. The Company continues to pay a commitment fee on the available amount of the Credit Facility.

~~Loan Assumed on 50 Fremont~~

The Company assumed a $200.0 million loan with the acquisition of 50 Fremont (“Loan”). The Loan bears an interest rate of 3.75% per annum and is due in June 2023. For the remainder of fiscal 2018, the Loan requires interest only payments. Beginning in fiscal 2019, principal and interest payments are required, with the remaining principal due at maturity. For the three months ended October 31, 2017 and 2016, total interest expense recognized was $1.8 million and $1.8 million, respectively. For the nine months ended October 31, 2017 and 2016, total interest expense recognized was $5.6 million and $5.6 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, 2017.

~~Interest Expense on Convertible Senior Notes, Term Loan, Credit Facility and Loan Assumed on 50 Fremont~~

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

Three Months Ended October 31, Nine Months Ended October 31,
2017 2016 2017 2016
Contractual interest expense $ 5,766
$ 5,207
$ 17,044
$ 11,398
Amortization of debt issuance costs 1,332
1,342
3,996
4,071
Amortization of debt discount 6,463
6,304
19,269
18,794
$ 13,561
$ 12,853
$ 40,309
$ 34,263

~~9. 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,
2017 January 31,
2017
Prepaid income taxes $ 43,301
$ 26,932
Other taxes receivable 33,099
34,177
Prepaid expenses and other current assets 393,546
218,418
$ 469,946
$ 279,527

~~Capitalized Software, net~~

Capitalized software, net at October 31, 2017 and January 31, 2017 was $140.8 million and $141.7 million, respectively. Accumulated amortization relating to capitalized software, net totaled $306.6 million and $250.9 million, respectively, at October 31, 2017 and January 31, 2017.

Capitalized internal-use software amortization expense totaled $18.7 million and $16.6 million for the three months ended October 31, 2017 and 2016, respectively and $55.7 million and $47.5 million for the nine months ended October 31, 2017 and 2016, respectively.

The Company capitalized $2.0 million and $1.7 million of stock-based expenses related to capitalized internal-use software development during the three months ended October 31, 2017 and 2016, respectively, and $5.9 million and $5.1 million for the nine months ended October 31, 2017 and 2016, respectively.

~~Other Assets, net~~

~~Other assets consisted of the following (in thousands):~~

As of
October 31,
2017 January 31,
2017
Deferred income taxes, noncurrent, net $ 31,596
$ 28,939
Long-term deposits 23,979
23,597
Domain names and patents, net 26,811
39,213
Customer contract assets (1) 201,357
281,733
Other 141,145
113,387
$ 424,888
$ 486,869

~~(1)~~ Customer contract ~~asset reflects~~assets resulting from business combinations reflect the fair value of future billings of amounts that are contractually committed by acquired companies' existing customers as of the acquisition date.

~~Domain names and patents amortization expense was $4.3~~ Customer contract assets are amortized over the corresponding assumed contract terms. Customer contract assets resulting from business combinations were $96 million and ~~$4.1~~$42 million as of July 31, 2021 and January 31, 2021, respectively, and are included in other assets on the condensed consolidated balance sheets.

Goodwill

Goodwill represents the excess of the purchase price in a business combination over the fair value of net assetsacquired.

The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, were as follows (in millions):








Balance as of January 31, 2021	$	26,318
Slack	21,453
Acumen	337



Other adjustments (1)	(5)
Balance as of July 31, 2021	$	48,103

(1) Adjustments include measurement period adjustments for business combinations from the prior year and the effect of foreign currency translation.

Table of Contents

8. Debt

The carrying values of the Company's borrowings were as follows (in millions):


Instrument	Date of issuance	Maturity date	Contractual interest rate	Outstanding principal as of July 31, 2021		July 31, 2021		January 31, 2021
2023 Senior Notes	April 2018	April 2023	3.25%	$	1,000	$	997	$	996
Loan assumed on 50 Fremont	February 2015	June 2023	3.75%	188		188		190
2024 Senior Notes	July 2021	July 2024	0.625%	1,000		996		0
Slack Convertible Notes	July 2021 (1)	April 2025	0.50%	863		1,339		0
2028 Senior Notes	April 2018	April 2028	3.70%	1,500		1,491		1,491
2028 Senior Sustainability Notes	July 2021	July 2028	1.50%	1,000		990		0
2031 Senior Notes	July 2021	July 2031	1.95%	1,500		1,487		0
2041 Senior Notes	July 2021	July 2041	2.70%	1,250		1,233		0
2051 Senior Notes	July 2021	July 2051	2.90%	2,000		1,976		0
2061 Senior Notes	July 2021	July 2061	3.05%	1,250		1,234		0
Total carrying value of debt				$	11,551	11,931		2,677
Less current portion of debt						(1,342)		(4)
Total noncurrent debt						$	10,589	$	2,673

(1) Assumed in July 2021 acquisition of Slack.

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

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above as of July 31, 2021 and January 31, 2021 was $10.9 billion and $2.8 billion, respectively. These fair values were determined based on the closing trading price per $100 of the Senior Notes as of the last day of trading of the second quarter of fiscal 2022 and the last day of trading of fiscal 2021, respectively, and are deemed Level 2 liabilities within the fair value measurement framework. The Slack Convertible Notes were recorded at their fair value as of July 31, 2021, based on the conversion rights available to the noteholders under the Indenture (as defined below), the Slack merger consideration and certain Company share price history as of July 31, 2021, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of July 31, 2021 were as follows (in millions):


Fiscal period:
Remaining six months of fiscal 2022	$	2
Fiscal 2023	4
Fiscal 2024	1,182
Fiscal 2025	1,000
Fiscal 2026	863
Thereafter	8,500
Total principal outstanding	$	11,551

July 2021 Notes

In July 2021 the Company issued $8.0 billion aggregate principal amount of senior unsecured Senior Notes (collectively, the “July 2021 Notes”), with maturities ranging from 2024 to 2061. The proceeds from this offering, net of discounts and debt issuance costs, was $7.9 billion. Interest on each of the July 2021 Notes is payable semi-annually in arrears. The Company may redeem any portion of the July 2021 Notes, either in whole or in part, at any time, subject to certain early redemption provisions.

An amount equal to the net proceeds from the 2028 Senior Sustainability Notes will be allocated to finance or refinance, in whole or in part, one or more new or existing green or social projects that satisfy certain criteria. The remainder of the net proceeds from the July 2021 Notes were used to partially fund the cash consideration payable by the Company for the ~~three months~~Slack acquisition, as well as related fees, costs and expenses. For more information regarding the acquisition of Slack, see Note 6 “Business Combinations.”

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In contemplation of the Slack acquisition, the Company had previously obtained contingent financing commitments from certain financial institutions for a $4.0 billion 364-day senior unsecured bridge loan facility and a $3.0 billion three-year senior unsecured term loan agreement. The Company terminated these borrowing facilities upon the issuance of the July 2021 Notes.

Slack Convertible Notes

In connection with the July 2021 acquisition of Slack, the Company assumed $863 million aggregate principal amount of 0.50 percent Convertible Senior Notes due 2025 (the “Slack Convertible Notes”) with a fair value of $1.3 billion as of the acquisition date. Under the indenture governing the Slack Convertible Notes (the “Indenture”), the Slack Convertible Notes bear semi-annual interest payments at 0.50 percent. The Slack Convertibles Notes mature on April 15, 2025, unless earlier converted or redeemed. The Slack Convertible Notes are convertible into merger consideration and may be settled in cash or a combination of both cash and shares based on a conversion ratio of 32.2630 units of merger consideration per note. On the date of the acquisition, the Company notified noteholders of their right to convert their notes under the terms of the Indenture, which provided for a conversion premium for notes converted by August 18, 2021. The notice specified that notes converted by August 18, 2021 would be settled entirely in cash.

Through the date of filing, the Company has received conversion notices for $852 million of the $863 million aggregate principal balance of the Slack Convertible Notes, which the Company expects to settle in cash in the fiscal quarter ended October 31, ~~2017 and 2016, respectively, and $13.0 million and $11.9 million for~~2021. There was no material change to the ~~nine months ended October 31, 2017 and 2016, respectively.~~

~~Accounts Payable, Accrued Expenses and Other Liabilities~~

~~Accounts payable, accrued expenses and other liabilities consisted~~fair value of the ~~following (in thousands):~~Slack Convertible Notes between the Slack acquisition date and July 31, 2021.

Slack Capped Calls

As of
October 31,
2017 January 31,
2017
Accounts payable $ 120,019
$ 115,257
Accrued compensation 622,419
730,390
Non-cash equity liability (1) 49,435
68,355
Accrued other liabilities 488,071
419,299
Accrued income and other taxes payable 193,693
239,699
Accrued professional costs 44,757
38,254
Accrued rent 33,968
19,710
Capital lease obligation, current 114,147
102,106
Financing obligation - leased facility, current 19,899
19,594
$ 1,686,408
$ 1,752,664

~~(1) Non-cash equity liability represents~~In connection with the ~~purchase price~~acquisition of ~~shares issued~~Slack, the Company additionally assumed certain capped call contracts which Slack negotiated with multiple financial institutions as counterparties. The capped calls were intended to ~~non-executive employees, for those shares exceeding previously registered ESPP shares at~~reduce or offset the ~~time~~potential dilution or negative cash outflows in the event of ~~sale to~~conversion of the ~~extent the shares had not been subsequently sold by the employee purchaser.~~Slack Convertible Notes. The Company ~~expects this liability will be relieved~~agreed with the counterparties on settlement terms for these contracts, and the capped calls were settled in full in July 2021, which resulted in the ~~fourth quarter~~Company’s receipt of ~~fiscal 2018.~~aggregate cash proceeds of $168 million.

~~Other Noncurrent Liabilities~~Revolving Credit Facility

~~Other noncurrent liabilities consisted~~In December 2020, the Company entered into a Credit Agreement with Citibank, N.A., as administrative agent, and certain other institutional lenders (the “Revolving Loan Credit Agreement”) that provides for a $3.0 billion unsecured revolving credit facility (“Credit Facility”) and that matures in December 2025. The Company may use the proceeds of future borrowings under the Credit Facility for general corporate purposes which may include, without limitation, financing the consideration for, fees, costs and expenses related to any acquisition.

There were no outstanding borrowings under the Credit Facility as of July 31, 2021. The Company continues to pay a commitment fee on the available amount of the Credit Facility, which is included within other expense in the Company's condensed consolidated statements of operations.

Interest Expense on Debt

The following table sets forth total interest expense recognized related to debt (in ~~thousands):~~millions), which is included within other expense in the Company’s condensed consolidated statements of operations:


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Contractual interest expense	$	34	$	24	$	59	$	48
Amortization of discounts and debt issuance costs	6		1		14		2

	$	40	$	25	$	73	$	50

Table of ~~Business and Significant Accounting Policies” to the consolidated financial statements for our discussion about new accounting pronouncements adopted and those pending.~~Contents


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Foreign Currency Exchange Risk

We primarily conduct our business in the following locations: the United States, Europe, Canada, Latin America, Asia Pacific and Japan. The expanding global scope of our business exposes us to the risk of fluctuations in foreign currency markets, including emerging markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, costs associated with third-party infrastructure providers, additional headcount in foreign countries, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling, Japanese Yen, Canadian Dollar, Australian Dollar and ~~Japanese Yen~~Brazilian Real against the United States Dollar (“USD”). These exposures may change over time as business practices evolve and economic conditions ~~change.~~change, including market impacts associated with COVID-19. Changes in foreign currency exchange rates could have an adverse impact on our financial results and cash flows.

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

Foreign Currency Transaction Risk

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

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

Foreign Currency Translation Risk

Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenues, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into USD. ~~As the USD fluctuated against certain international currencies over the past several months, the amounts~~The amount of revenue ~~and deferred revenue~~ that wewas reported in USD for foreign subsidiaries that transact in international currencies ~~were slightly higher relative~~during the three months ended July 31, 2021 benefited by approximately two percent compared to the three months ended July 31, 2020. In addition, fluctuations in USD against international currencies did not have a material impact on our remaining performance obligation as of July 31, 2021 compared to what we would have reported as of July 31, 2020 using a constant currency ~~rate.~~rates.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling ~~$3.6~~$9.7 billion ~~at October~~as of July 31, ~~2017.~~2021. This amount was invested primarily in money market funds, time deposits, corporate notes and bonds, government securities and other debt securities with credit ratings of at least BBB or better. The cash, cash equivalents and marketable securities are held for general corporate purposes, including ~~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~~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~~expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or ~~declines in fair value are determined~~due to ~~be other-than-temporary.~~ expected credit losses.

Our fixed-income portfolio is also subject to interest rate risk.

An immediate increase or decrease in interest rates of ~~100-basis~~100 basis points at ~~October~~July 31, ~~2017~~2021 could result in a ~~$31.5~~$51 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,~~loss, and are realized only if we sell the underlying securities.

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At January 31, ~~2017,~~2021, we had cash, cash equivalents and marketable securities totaling ~~$2.2~~$12.0 billion. ~~The fixed-income portfolio was also subject to interest rate risk.~~ Changes in interest rates of ~~100-basis~~100 basis points would have resulted in market value changes of ~~$13.0~~$63 million.

Market Risk and Market Interest Risk

We deposit our cash with multiple financial institutions.

In ~~March 2013,~~addition, we ~~issued at par value $1.15 billion of 0.25% convertible senior notes (“Notes”) due April 1, 2018. Holders of the Notes may convert the Notes prior~~maintain debt obligations that are subject 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.market interest risk, as follows (in millions):

Instrument

Maturity Date

Principal Outstanding as of July 31, 2021

Interest Terms

Contractual interest rate

2023 Senior Notes

April 2023

1,000

Fixed

3.25%

Loan assumed on 50 Fremont

June 2023

188

Fixed

3.75%

2024 Senior Notes

July 2024

1,000

Fixed

0.625%

Slack Convertible Notes

April 2025

863

Fixed

0.50%

Credit Facility

December 2025

Floating

N/A

2028 Senior Notes

April 2028

1,500

Fixed

3.70%

2028 Senior Sustainability Notes

July 2028

1,000

Fixed

1.50%

2031 Senior Notes

July 2031

1,500

Fixed

1.95%

2041 Senior Notes

July 2041

1,250

Fixed

2.70%

2051 Senior Notes

July 2051

2,000

Fixed

2.90%

2061 Senior Notes

July 2061

1,250

Fixed

3.05%

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 is exposed to interest rate risk. Generally, the fair value ofborrowings under our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of our Notes is affected by our stock price. The principal balance of our Notes was $1.15 billion as of October 31, 2017. The total estimated fair value of our Notes at October 31, 2017 was $1.8 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 2018, which was $102.34.

In July 2016, we amended our credit agreement (“Revolving Loan Credit Agreement”) to provide for a $1.0 billion unsecured revolving credit facility (“Credit Facility”) that matures in July 2021.

~~The Borrowings under the~~ Credit Facility bear interest, at our option, at a base rate plus a spread of 0.00% to ~~0.75%~~0.125% or an adjusted LIBOR rate plus a spread of ~~1.00%~~0.50% to ~~1.75%~~1.125%, in each case with such spread being determined based on our ~~consolidated leverage ratio~~credit rating. Our Credit Facility allows for the ~~preceding four fiscal quarter period. Regardless of what amounts, if any, are outstanding under~~LIBOR rate to be phased out and replaced with the ~~revolving credit facility,~~Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition. We are also obligated to pay an ongoing commitment fee on undrawn ~~amounts at a rate of 0.125% to 0.25%, with such rate being based on our consolidated leverage ratio for the preceding four fiscal quarter period, payable in arrears quarterly.~~amounts. As of ~~October~~July 31, ~~2017~~2021, there was no outstanding borrowing amount under the Credit Facility.

~~In February 2015, we~~We assumed ~~a $200.0 million loan~~the Slack Convertible Notes in connection with the July 2021 acquisition of ~~50 Fremont (“Loan”).~~Slack. The ~~Loan bears an interest rate~~fair market value of ~~3.75% per annum and is due in June 2023. For~~ the ~~remainder of fiscal 2018, the Loan requires interest only payments. Beginning in fiscal 2019, principal and interest payments are required,~~Slack Convertible Notes fluctuates with the ~~remaining principal due at maturity. The Loan can be prepaid at any time subject~~market price of our common stock. See Note 8 “Debt” to ~~a yield maintenance fee. The agreement governing~~ the ~~Loan contains certain customary affirmative and negative covenants that we were~~condensed consolidated financial statements in ~~compliance with as~~Item 1 of ~~October 31, 2017.~~

In July 2016, we entered into a $500.0 million term loan (“Term Loan”) which matures in July 2019 and bears interest at our option, at either a base rate plus a spread of 0.00% to 0.75% or an adjusted LIBOR rate plus a spread of 1.00% to 1.75%, in each case with such spread being determined based on the Company’s consolidated leverage ratioPart I for the preceding four fiscal quarter period. We entered into the Term Loan for purposes of partially funding the acquisition of Demandware. Interest is due and payable in arrears quarterly for loans bearing interest at a rate based on the base rate and at the end of an interest period in the case of loans bearing interest at the adjusted LIBOR rate.

By entering into the Term Loan, we have assumed risks associated with variable interest rates based upon a variable base rate or LIBOR. The weighted average interest rate on the Term Loan was 2.2% as of October 31, 2017. Changes in the overall level of interest rates affect the interest expense that we recognize in our statements of operations.more information.

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

We have ana strategic investment portfolio that includes strategic investments in ~~public~~privately held and ~~privately held~~publicly traded companies, which range from early-stage companies to more mature companies ~~with established revenue streams~~both domestically and ~~business models. Our portfolio consists of investments~~internationally, including in ~~over 200 privately held~~emerging markets. We primarily invest in enterprise cloud companies, ~~and three public companies, primarily comprised of independent software vendors~~technology startups and system integrators. ~~Our~~These companies in many aspects are digitally transforming their respective industries and helping us expand our ecosystem and support other corporate initiatives. As these industries continue to mature and technologies change, our investment strategy and corresponding investment opportunities have expanded to include investments in ~~these companies range from $0.2 million to over $90.0 million, with 16 investments individually equal to or in excess of approximately $10.0 million.~~

~~We invest in early-to-late~~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~~companies concurrently with their initial public offerings, both of which typically result in larger individual capital investments. We made several of these investments in ~~all of our regions:~~ the ~~Americas, Europe, and Asia Pacific.~~past eighteen months. We plan to continue ~~to invest in~~ these types of strategic investments, including in companies representing targeted geographies, ~~and~~ targeted business and technological initiatives, as opportunities arise that we find ~~attractive~~

~~The primary purpose~~attractive. Our strategy includes using proceeds from realized gains recognized on the sales of our existing strategic investments to, in part, fund these new strategic investments.

As of July 31, 2021, our portfolio consisted of investments in over 300 companies, with capital investments ranging from less than $0.3 million to approximately $325 million, and 15 investments with carrying values individually equal to or in excess of approximately $50 million. As of July 31, 2021, we held one publicly traded investment with a carrying value that was greater than 10 percent of our strategic investment portfolio and one privately held investment with a carrying value that was individually greater than 15 percent of our strategic investment portfolio.

The following table sets forth additional information regarding active equity investments within our strategic investment portfolio as of July 31, 2021 and excludes exited investments (in millions):


Investment Type	Capital Invested		Unrealized Gains (Cumulative)		Unrealized Losses (Cumulative)		Carrying Value as of July 31, 2021
Publicly held equity securities	$	444	$	580	$	(13)	$	1,011
Privately held equity securities	2,145		1,069		(195)		3,019
Total equity securities	$	2,589	$	1,649	$	(208)	$	4,030

We anticipate additional volatility to our condensed consolidated statements of operations due to changes in market prices, observable price changes and impairments to our investments. These changes could be material based on market conditions and events. While historically our strategic investment portfolio has had a positive impact on our financial results, that may not be true for future periods, particularly in periods of significant market fluctuations that affect our equity securities within our strategic investments portfolio. Volatility in the global market conditions, including recent and ongoing volatility related to the impacts of COVID-19 and related public health measures, may impact our strategic investment portfolio and our financial results may fluctuate from historical results and expectations.

Our investments in privately held securities are in various classes of equity which may have different rights and preferences. The particular securities we hold, and their rights and preferences relative to those of other securities within the capital structure, may impact the magnitude by which our investment value moves in relation to movement of the total enterprise value of the company. As a result, our investment value in a specific company may move by more or less than any change in value of that overall company. An immediate decrease of 10 percent in enterprise value of our publicly traded and significant privately held equity securities held as of July 31, 2021, which represents 56 percent of the strategic investment portfolio, could result in a $199 million reduction in the value of our strategic investment portfolio. Fluctuations in the value of our privately held equity investments are only recorded when there is ~~to create~~ an ~~ecosystem~~observable transaction for a same or similar investment of ~~enterprise cloud companies and accelerate~~ the ~~growth~~same issuer or in the event of ~~technology startups and system integrators. Therefore, we~~impairment.

We continually evaluate our investments in privately held and publicly traded ~~companies, post public offering, for exit strategies. Our~~companies. In certain cases, our ability to sell these investments may be impacted by contractual obligations to hold the securities for a set period of time after a public offering. ~~Currently,~~For example, one of our publicly ~~held~~traded investments, which individually had a carrying value of approximately 13 percent of our total strategic investment portfolio, is subject to ~~such~~ a ~~contractual obligation,~~lock-up agreement until September 2021 for the investment made concurrent with their IPO. A portion of our holdings was released from the lock-up agreement early as certain criteria were met and a portion of the lock-up expired. Another of our publicly traded investments, which ~~expires in~~individually represents approximately one percent of our total strategic investments portfolio is under a lock-up agreement until August 2021. Additionally, three other of our publicly traded investments, together representing approximately seven percent of our total strategic investment portfolio, are subject to lock-up agreements until the ~~first~~fourth quarter of fiscal ~~2019.~~

~~Our strategic investments in privately held companies are primarily in preferred stock~~2022. For two 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 forthree investments, ~~in non-marketable debt at their estimated fair value and equity securities~~a portion of the ~~privately~~investment held ~~companies using~~may be released from lock-up early if certain stock performance criteria are met.

In addition, the ~~cost method of accounting. Otherwise, we account for the investments using the equity method of accounting.~~

As of October 31, 2017 and January 31, 2017 the carrying value of our investments in privately held companies was $570.1 million and $526.0 million, respectively. The estimated fair value of our investments in privately held companies was $803.9 million and $758.3 million as of October 31, 2017 and January 31, 2017, 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 recorded other than temporary impairments or 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, particularly those in privately held companies, are therefore subject to a risk of partial or total loss of ~~investment~~invested capital. The rapid spread of COVID-19 and its reverberating effects on the global economy have caused disruptions to the industry and to financial markets that are inhibiting and may continue to inhibit the ability of investee companies to complete a liquidity event. In severe cases, our investee companies may no longer be able to operate or could experience reduced profitability, delayed public offerings, reduced ability to raise favorable rounds of financing, or acquisitions at less favorable terms. These outcomes could have a material adverse effect on our financial position, results of operations and cash flows.

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~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

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

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

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

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

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

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.

As a result of COVID-19, and as described above, we took precautionary actions to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely. We believe that our internal control over financial reporting can be executed effectively and continues to be effective.

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PART II. ~~OTHER INFORMATION~~


~~ITEM 1.~~	ITEM 1. LEGAL PROCEEDINGS

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

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.~~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 otherFor more information ~~and events pertaining to a particular matter. The outcomes of our~~regarding legal proceedings, such as the Tableau and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. As a result, we may not be able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to any contingencies, and our estimates may not prove to be accurate.

In our opinion, resolution of all current matters is not expected to have a material adverse impact on our consolidated results of operations, cash flows or financial position. However, depending on the nature and timing of a given dispute or other contingency, an unfavorable resolution could materially affect our current or future results of operations or cash flows, or both, in a particular quarter.

~~See also~~Slack shareholder derivative actions, see Note ~~14,~~12 “Legal Proceedings and Claims” ofto the ~~Notes to Consolidated Financial Statements included~~condensed consolidated financial statements in ~~Part I,~~ Item 1 of ~~this Quarterly Report on Form 10-Q, which is incorporated herein by reference.~~Part I.


~~ITEM 1A.~~	~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

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

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

Risk Factor Summary

Operational and Execution Risks

•Any breaches in our security measures or those of our third-party data center hosting facilities, cloud computing platform providers or third-party service partners, or the underlying infrastructure of the Internet that cause unauthorized access to a customer’s data, our data or our IT systems, or the blockage or disablement of authorized access to our services.

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

•Any interruptions or delays in services from third parties, including data center hosting facilities, cloud computing platform providers and other hardware and software vendors, or from our inability to adequately plan for and manage service interruptions or infrastructure capacity requirements.

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

•Failure to realize the anticipated benefits of the acquisition of Slack Technologies, Inc. (“Slack”).

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

•Customers’ non-renewal of or reduction in subscriptions at the time of renewal, or our inability to accurately predict subscription renewals and upgrade rates.

•Disruptions caused by periodic changes to our sales organization.

•Dependency of our services on the development and maintenance of the infrastructure of the Internet by third parties.

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

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

•Any loss of key members of our management team or development and operations personnel, or inability to attract and retain employees necessary to support our operations and growth.

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

Strategic and Industry Risks

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

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•A failure by us to expand our services and to develop and integrate our existing services in order to keep pace with technological developments.

•An inability to maintain and enhance our brands.

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

•Any discontinuance by third-party developers and providers in embracing our technology delivery model and enterprise cloud computing services, or customers asking us for warranties for third-party applications, integrations, data and content.

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

Legal and Regulatory Risks

•Privacy concerns and laws as well as evolving regulation of cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations.

•Evolving industry-specific regulation and other requirements and standards and unfavorable industry-specific laws, regulations, interpretive positions or standards.

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

•Any failure to obtain registration or protection of our intellectual property rights.

•Lawsuits that have been and may be filed against us and Slack in connection with the mergers.

•Risks related to government contracts and related procurement regulations.

•Governmental sanctions and export and import controls that could impair our ability to compete in international markets and may subject us to liability.

Financial Risks

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

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

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

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

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

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

Risks Related to Owning Our ~~Business~~Common Stock

•Fluctuations in our quarterly results.

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

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

General Risks

•The effects of the COVID-19 pandemic and related public health measures on how we and our customers are operating our businesses.

•Volatile and significantly weakened global economic conditions.

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

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

Operational and Execution Risks

If our security measures or those of our third-party data center hosting facilities, cloud computing platform providers or third-party service partners, or the underlying infrastructure of the Internet are breached, and unauthorized access is obtained to a customer’s data, our data or our ~~Information Technology ("IT")~~IT systems, or authorized access is blocked or disabled, our services may be perceived as not being secure, customers may curtail or stop using our services, and we may incur significant reputational harm, legal ~~and financial~~ exposure and ~~liabilities.~~liabilities, or a negative financial impact.

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Our services involve the storage and transmission of our customers’ and our ~~customers' customers'~~customers’ customers’ proprietary and other sensitive data, including financial, ~~information~~health and other ~~personally identifiable~~personal information. Security breaches could expose us to a risk of loss or inappropriate use of this information, or the denial of access to this information, any of which could result in litigation and possible liability. While we have security measures in place ~~they~~to protect our customers’ and our customers’ customers’ data, our services and underlying infrastructure may in the future be materially breached or compromised as a result of the following:

•third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to, or denying authorized access to our IT systems, our customers’ data or our data, including our intellectual property and other confidential business information. Additionally, third parties may attemptattempts to fraudulently induce our employees, partners or customers ~~into disclosing~~to disclose sensitive information such as user names, passwords or other information ~~in order~~ to gain access to our customers’ data or IT systems, or our data or our IT systems;

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

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

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

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

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

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

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

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

In addition, the changes in our work environment as a result of the COVID-19 pandemic could adversely affect our

security measures, as well as our ability to address and respond to incidents quickly. These risks are mitigated, to the extent possible, by our ability to maintain and improve business and data governance policies, enhanced processes and internal security controls, including our ability to escalate and respond to known and potential risks. Our Board of Directors, our Audit Committee historically, our Cybersecurity Committee now and our executive management are regularly briefed on our cybersecurity policies and practices and ongoing efforts to improve security, as well as periodic updates on cybersecurity events. Although we have developed systems and processes designed to protect our customers’ and our customers’ customers’ proprietary and other sensitive data, we can provide no assurances that such measures will provide absolute security or that a material breach will not occur. For example, our ability to mitigate these risks may be impacted by the following:

•frequent changes to, and growth in complexity of, the techniques used to breach, obtain unauthorized access to, or to sabotage IT systems ~~change frequently~~ and infrastructure, which are generally ~~are~~ not recognized until launched against a target, ~~we may be~~and could result in our being unable to anticipate ~~these techniques~~ or to implement adequate ~~preventative measures. In addition,~~measures to prevent such techniques;

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

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

•authorization by our customers ~~may authorize~~to third-party technology providers to access their customer data, ~~and some of~~which may lead to our ~~customers may not have adequate security measures in place~~customers’ inability to protect their data that is stored on our ~~servers. Because we do not~~servers; and

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

In the normal course of business, we are and have been the target of malicious cyberattack attempts and have experienced other security incidents. To date, such identified security events have not been material or significant to us, including to our reputation or business operations, or had a material financial impact, but there can be no assurance that future cyberattacks will not be material or significant. Additionally, as our market presence grows, we may face increased risks of cyberattack attempts or security threats.

A security breach or incident could result in unauthorized parties ~~may also conduct attacks designed~~obtaining access to, ~~temporarily deny customers~~or the denial of authorized access to, our ~~services. Any~~IT systems or data, or our customers’ systems or data, including intellectual property and proprietary, sensitive or other confidential information. A security breach could also result in a loss of confidence in the security of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to increases in insurance premiums and legal, regulatory and financial exposure and liability. Finally, the detection, prevention and remediation of known or potential security vulnerabilities, including those arising from third-party hardware or software, may result in additional financial burdens due to additional direct and indirect costs, such as additional infrastructure capacity spending to mitigate any system degradation and the reallocation of resources from development activities.

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

Because our services are complex and incorporate a variety of hardware, proprietary software and third-party software, our services may have errors or defects that could result in unanticipated downtime for our subscribers and harm to our reputation and our business. Cloud services frequently contain undetected errors when first introduced or when new versions or enhancements are released. We have from time to time found defects in, and experienced disruptions to, our services and new defects or disruptions may occur in the future. Such defects could be the result of employee, contractor or other third-party acts or inaction, and could negatively affect our brand and reputation. Additionally, such defects could create vulnerabilities that could inadvertently permit access to protected customer data. For example, in fiscal 2020, we experienced a significant service disruption due to an internally deployed software update that had an unintended impact on our services for certain customers. We determined this disruption did not materially affect our business, reputation or financial results, but there is no assurance such circumstances could not recur with a material adverse effect on our business.

In addition, our customers may use our services in unanticipated ways that may cause a disruption in services for other customers attempting to access their data. As we acquire companies, we may encounter difficulty in ~~incorporating~~integrating the acquired technologies into our services and in augmenting the technologies to meet the quality standards that are consistent with our brand and reputation. As a result, our services may have errors or defects resulting from the complexities of integrating acquisitions.

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

~~Interruptions~~Any interruptions or delays in services from ~~third-parties,~~third parties, including data center hosting facilities, cloud computing platform providers orand other hardware and software vendors, or from our inability to adequately plan for and manage service interruptions or infrastructure capacity requirements, could impair the delivery of our services and harm our business.

We currently serve our customers from third-party data center hosting facilities and cloud computing platform providers located in the United States and other countries. We also rely on computer hardware purchased or leased from, software licensed from, and cloud computing platforms provided by, third parties in order to offer our services, including database software, hardware and data from a variety of vendors. Any disruption or damage to, or failure of our systems generally, including the systems of our third-party platform providers, could result in interruptions in our services. We have from time to time experienced interruptions in our services and such interruptions may occur in the future. In addition, the ongoing COVID-19 pandemic has disrupted and continues to disrupt the supply chain of hardware, such as integrated circuits, needed to maintain these third-party systems or to run our business, which affects our and our suppliers’ operations. As we increase our reliance on these third-party systems, particularly with respect to third-party cloud computing platforms, our exposure to damage from service interruptions may increase. Interruptions in our services may ~~reduce our revenue,~~ cause us to issue credits or pay penalties, cause customers to make warranty or other claims against us or to terminate their subscriptions, and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenue. Our business and reputation would also be harmed if our customers and potential customers believe our services are unreliable.

~~We use a range of disaster recovery and business continuity arrangements.~~ For many of our offerings, our production environment and customers’ data are replicated in near ~~real-time~~real time in a separate facility located elsewhere. Certain offerings, including some offerings of companies added through acquisitions, may be served through alternate facilities or arrangements. We do not control the operation of any of these facilities, and they may be vulnerable to damage or interruption from

earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, as well as local administrative actions (including shelter-in-place or similar orders), changes to legal or permitting requirements and litigation to stop, limit or delay operation. Despite precautions taken at these facilities, such as disaster recovery and business continuity arrangements, the occurrence of a natural disaster or pandemic (including the COVID-19 pandemic), an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our services.

These hardware, software, data and cloud computing platforms may not continue to be available at reasonable prices, on commercially reasonable terms or at all. Any loss of the right to use any of these hardware, software or cloud computing platforms could significantly increase our expenses and otherwise result in delays in the provisioning of our services until equivalent technology is either developed by us, or, if available, is identified, obtained through purchase or license and integrated into our services.

If we do not accurately plan for our infrastructure capacity requirements and we experience significant strains on our data center capacity, our customers could experience performance degradation or service outages that may subject us to financial

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liabilities, result in customer losses and harm our reputation and business. ~~When~~As we add data centers and ~~add~~ capacity and continue to move to cloud computing platform providers, we may move or transfer our data and our customers’ data. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of our services, which may damage our business.

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

As part of our business strategy, we periodically make investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies and intellectual property rights. We continue to evaluate such opportunities and expect to continue to make such investments and acquisitions in the future.

Acquisitions and other transactions, arrangements and investments involve numerous risks and could create unforeseen operating difficulties and expenditures, including:

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

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

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

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

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

•brand or reputational harm associated with our strategic investments or acquired companies;

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

•diversion of financial and managerial resources from existing operations;

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

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

•difficulties in integrating acquired operations, technologies, services, platforms and personnel;

•the inability to obtain (or a material delay in obtaining) the regulatory approvals, including from antitrust or other similar regulatory authorities, necessary to complete transactions or to integrate operations, or potential remedies imposed by regulatory authorities either as a condition to or following the completion of a transaction, which may include divestitures, ownership or operational restrictions or other structural or behavioral remedies;

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

•differences between our values and those of our acquired companies, as well as disruptions to our workplace culture;

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

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

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

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

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

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

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

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

•negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and operating lease right-of-use assets;

•the loss of acquired unearned revenue and unbilled unearned revenue;

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

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

•additional stock-based compensation issued or assumed in connection with the acquisition, including the impact on stockholder dilution and our results of operations;

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

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

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

•the tax effects and costs of any such acquisitions including the related integration into our tax structure and assessment of the impact on the realizability of our future tax assets or liabilities (including a potential one-time income tax payment in connection with the integration of ClickSoftware and other acquired Israeli entities).

Any of these risks could harm our business or negatively impact our results of operations. In addition, to facilitate acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions or investments, and which may affect the risks of owning our common stock. For example, if we finance acquisitions by issuing equity or convertible or other debt securities or loans, our existing stockholders may be diluted, or we could face constraints related to the terms of, and repayment obligation related to, the incurrence of indebtedness that could affect the market price of our common stock.

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

We may fail to realize all of the anticipated benefits of the Slack acquisition, and the integration and benefits of the acquisition may take longer to realize than expected.

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

In addition, we are devoting significant attention and resources to successfully align the business practices and operations of Salesforce and Slack. This process may disrupt the businesses and, if ineffective, could limit the anticipated benefits of the acquisition.

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

We continue to experience significant growth in our customer base and personnel, particularly through acquisitions, which has placed a strain on and in the future may stress the capabilities of our management, administrative, operational and financial infrastructure. We anticipate that significant additional investments will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth. The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term. We may not be able to make these investments as quickly or effectively as necessary to successfully scale our operations.

We regularly upgrade or replace our various software systems and processes. If the implementations of these new applications are delayed, or if we encounter unforeseen problems with our new systems and processes or in migrating away from our existing systems and processes, our operations and our ability to manage our business could be negatively impacted. For example, our efforts to further automate our processes for customer contracts may be complicated by unanticipated operating difficulties.

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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. Additionally, changes in our work environment and workforce as a result of the COVID-19 pandemic could adversely affect our operations. The COVID-19 pandemic may have long-term effects on the nature of the office environment and remote working. In particular, as our offices reopen we plan to offer a significant percentage of our employees the flexibility in the amount of time they work in an office. Our new office model and any adjustments made to our current and future office environments or work-from-home policies may not meet the needs and expectations of our workforce, which could negatively impact our ability to attract and retain our employees. To manage the expected domestic and international growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls, our reporting systems and procedures, and our utilization of real estate. If we fail to successfully scale our operations and increase productivity, we may be unable to execute our business plan and the value of our common stock could decline.

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

Our customers have no obligation to renew their subscriptions for our services after the expiration of their contractual subscription period, which is typically 12 to 36 months, and in the normal course of business, some customers have elected not to renew. In addition, our customers may renew for fewer subscriptions, renew for shorter contract lengths, or switch to lower cost offerings of our services. It is difficult to predict attrition rates given our varied customer base of enterprise and small and medium-size business customers and the number of multi-year subscription contracts. Historically, our subscription and support revenues primarily consisted of subscription fees; however, with the 2018 acquisition of MuleSoft and the 2019 acquisition of Tableau, subscription and support revenues also now include term software license sales. We have less experience forecasting the renewal rates of such term software license sales. Our attrition rates may increase or fluctuate as a result of a number of factors, including customer dissatisfaction with our services, customers’ spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes and deteriorating general economic conditions.

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

If customers do not renew their subscriptions, do not purchase additional features or enhanced subscriptions or if attrition rates increase, our business could be harmed.

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

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

Our ability to deliver our services is dependent on the development and maintenance of the infrastructure of the Internet by third parties.

The Internet’s infrastructure comprises many different networks and services that are highly fragmented and distributed by design. This infrastructure is run by a series of independent third-party organizations that work together to provide the infrastructure and supporting services of the Internet under the governance of the Internet Corporation for Assigned Numbers and Names (“ICANN”) and the Internet Assigned Numbers Authority, now under the stewardship of ICANN.

The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, denial-of-service attacks or related cyber incidents, and it could face outages and delays in the future, potentially reducing the availability of the Internet to us or our customers for delivery of our Internet-based services. Any resulting interruptions in our services or the ability of our customers to access our services could result in a loss of potential or existing customers and harm our business.

In addition, certain countries have implemented (or may implement) legislative and technological actions that either do or can effectively regulate access to the Internet, including the ability of Internet service providers to limit access to specific websites or content. Other countries have attempted or are attempting to change or limit the legal protections available to businesses that depend on the Internet for the delivery of their services. Additionally, the COVID-19 pandemic has also led to

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quarantines, shelter-in-place orders and work-from-home directives, all of which have increased demands for internet access and may create access challenges. These actions could potentially limit or interrupt access to our services from certain countries or Internet service providers, increase our risk or add liabilities, impede our growth, productivity and operational effectiveness, result in the loss of potential or existing customers and harm our business.

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

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

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

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

•regulatory frameworks or business practices favoring local competitors;

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

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

•compliance with multiple, conflicting, ambiguous or evolving governmental laws and regulations, including employment, tax, privacy, anti-corruption, import/export, customs, anti-boycott, sanctions and embargoes, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, including rules related to compliance by our third-party resellers and our ability to identify and respond timely to compliance issues when they occur;

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

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

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

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

•uncertainty regarding the imposition of and changes in the United States’ and other governments’ trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including the evolving relations between the United States and China;

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

•regional data privacy laws and other regulatory requirements that apply to outsourced service providers and to the transmission of our customers’ data across international borders, which grow more complex as we scale, expand into new markets and enhance the breadth of our service offerings;

•different pricing environments;

•difficulties in staffing and managing foreign operations;

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

•longer accounts receivable payment cycles and other collection difficulties; and

•regional economic and political conditions.

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

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may have to delay revenue recognition for some complex transactions, all of which could harm our business and operating results.

operations, and our customers’ operations and businesses, and this has adversely affected, and may continue to adversely affect,

our sales efforts.

In addition, larger customers and governmental entities may demand more configuration, integration services and features. As a result of these factors, these sales opportunities may require us to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting our own sales and professional services resources to a smaller number of larger transactions, while potentially requiring us to delay revenue recognition on some of these transactions until the technical or implementation requirements have been met.

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

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

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

Our success depends substantially upon the continued services of our executive officers and other key members of management, particularly our chief executive officer. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives. For example, in February 2021, Mark Hawkins retired as President and Chief Financial Officer of the Company, but will remain as an adviser through the end of our third quarter of fiscal 2022. Such changes in our executive management team may be disruptive to our business. We are also substantially dependent on the continued service of our existing development and operations personnel because of the complexity of our services and technologies. Our executive officers, key management, development or operations personnel could terminate their employment with us at any time. The loss of one or more of our key employees or groups of employees could seriously harm our business.

The technology industry is subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services, as well as competition for sales executives, data scientists and operations personnel. We are also committed to building a diverse workforce. We have experienced, and continue to experience, significant competition in talent recruitment and retention, and may not in the future be successful in our talent recruitment and retention or achieving the diversity goals we have set publicly. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring, developing, integrating and retaining highly skilled employees with appropriate qualifications. These difficulties may be amplified by evolving restrictions on immigration, travel, or availability of visas for skilled technology workers. These difficulties may potentially be further amplified by the high cost of living in the San Francisco Bay Area, where our headquarters are located. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.

In addition, we believe in the importance of our corporate culture, which fosters dialogue, collaboration, recognition, equality and a sense of family. As our organization grows and expands globally, and as employees’ workplace expectations develop, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. These difficulties may be further amplified by work-from-home requirements imposed and other workforce actions taken in response to the COVID-

19 pandemic. Our inability to maintain our corporate culture could negatively impact our ability to attract and retain employees or our reputation with customers and could negatively impact our future growth.

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

Our customers depend on our support organization to resolve technical issues relating to our applications. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services across our varying and diverse offerings. Outsourced provision of technical support may be suddenly and adversely impacted by unforeseen events, for example, as occurred when certain business process outsourced service providers were delayed in effectively servicing our customers due to conditions related to the COVID-19 pandemic. Increased customer demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our applications and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our service offerings to existing and prospective customers, and our business, operating results and financial position.

Strategic and Industry Risks

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

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

Our current competitors include:

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

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

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

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

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

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

•marketing vendors, which may specialize in advertising, targeting, messaging, or campaign automation;

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

•productivity tool and email providers, unified communications providers and consumer application companies that have entered the business software market; and

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

In addition, we may face more competition as we expand our product offerings. Some of our current and potential competitors may have competitive advantages, such as greater name recognition, longer operating histories, more significant installed bases, broader geographic scope, broader suites of service offerings and larger marketing budgets, as well as substantially greater financial, technical, personnel and other resources. In addition, many of our current and potential competitors have established marketing relationships and access to larger customer bases, and have major distribution agreements with consultants, system integrators and resellers. We also experience competition from smaller, younger competitors that may be more agile in responding to customers’ demands. These competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements or provide competitive pricing. As a result, even if our services are more effective than the products and services that our competitors offer, potential customers might select competitive products and services in lieu of purchasing our services. For all of these reasons, we may not be able to compete successfully against our current and future competitors, which could negatively impact our future sales and harm our business.

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Our efforts to expand our service offerings and to develop and integrate our existing services in order to keep pace with technological developments may not succeed and may reduce our revenue growth rate and harm our business.

We derive a significant portion of our revenue from subscriptions to our CRM enterprise cloud computing application services, and we expect this will continue for the foreseeable future. Our efforts to expand our current service offerings may not succeed and may reduce our revenue growth rate. In addition, the markets for certain of our offerings, including Work.com, Customer 360 Truth and other offerings, remain relatively new and it is uncertain whether our efforts, and related investments, will ever result in significant revenue for us. In addition, we may be required to continuously enhance our artificial intelligence offerings so that quality recommendations can be provided to our customers. Further, the introduction of significant platform changes and upgrades, such as our introduction of Hyperforce in fiscal 2021, may not succeed and early stage interest and adoption of such new services may not result in long term success or significant revenue for us.

In July 2021, we completed our acquisition of Slack, our largest acquisition to date. Slack is a relatively new category of business technology in a rapidly evolving market for software, programs and tools used by knowledge workers that is subject to rapidly changing technology, shifting user and customer needs, new and established market entrants, and frequent introductions of new products and services. The success of Slack as a service offering will depend on adding new users and organizations, converting users of the free version into paid customers, expanding usage within current customers, and selling premium subscription plans. Our ability to attract new users and organizations and increase revenue from existing paid customers will depend in large part on our ability to continually enhance and improve the features, integrations and capabilities that Slack offers, and to effectively introduce compelling new features, integrations and capabilities that reflect or anticipate the changing nature of the market in order to maintain and improve the quality and value of Slack.

If we are unable to develop enhancements to, and new features for, our existing or new services that keep pace with rapid technological developments, our business could be harmed. The success of enhancements, new features and services depends on several factors, including the timely completion, introduction and market acceptance of the feature, service or enhancement by customers, administrators and developers, as well as our ability to seamlessly integrate all of our product and service offerings and develop adequate selling capabilities in new markets. Failure in this regard may significantly impair our revenue growth as well as negatively impact our operating results if the additional costs are not offset by additional revenues. In addition, because our services are designed to operate over various network technologies and on a variety of mobile devices, operating systems and computer hardware and software platforms using a standard browser, we will need to continuously modify and enhance our services to keep pace with changes in Internet-related hardware, software, communication, browser, app development platform and database technologies, as well as continue to maintain and support our services on legacy systems. We may not be successful in either developing these modifications and enhancements or in bringing them to market timely.

Additionally, if we fail to anticipate or identify significant Internet-related and other technology trends and developments early enough, or if we do not devote appropriate resources to adapting to such trends and developments, our business could be harmed. Uncertainties about the timing and nature of new network platforms or technologies, including Hyperforce, or modifications to existing platforms or technologies, including text messaging capabilities, or changes in customer usage patterns thereof, could increase our research and development or service delivery expenses or lead to our increased reliance on certain vendors. Any failure of our services to operate effectively with future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and harm our business.

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

We believe that the brand identities we have developed, including associations with trust, customer success, innovation and equality, have significantly contributed to the success of our business. Maintaining and enhancing the Salesforce brand and our other brands are critical to expanding our base of customers, partners and employees. Our brand strength, particularly for our core services, will depend largely on our ability to remain a technology leader and continue to provide high-quality innovative products, services and features securely, reliably and in a manner that enhances our customers’ success even as we scale and expand our services. In order to maintain and enhance the strength of our brands, we may make substantial investments to expand or improve our product offerings and services or enter new markets that may be accompanied by initial complications or ultimately prove to be unsuccessful.

In addition, we have secured the naming rights to facilities controlled by third parties, such as office towers and a transit center, and any negative events or publicity arising in connection with these facilities could adversely impact our brand.

Further, entry into markets with weaker protection of brands or changes in the legal systems in countries we operate may impact our ability to protect our brands. If we fail to maintain, enhance or protect our brands, or if we incur excessive expenses in our efforts to do so, our business, operating results and financial condition may be materially and adversely affected.

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We are subject to risks associated with our strategic investments, including partial or complete loss of invested capital. Significant changes in the fair value of this portfolio, including changes in the valuation of our investments in publicly traded and privately held companies, could negatively impact our financial results.

We have strategic investments in publicly traded and privately held companies in both domestic and international markets, including in emerging markets. These companies range from early-stage companies to more mature companies with established revenue streams and business models. Many such companies generate net losses and the market for their products, services or technologies may be slow to develop, and, therefore, they are dependent on the availability of later rounds of financing from banks or investors on favorable terms to continue their operations. The financial success of our investment in any privately held company is typically dependent on a liquidity event, such as a public offering, acquisition or other favorable market event reflecting appreciation to the cost of our initial investment. Likewise, the financial success of our investment in any publicly held company is typically dependent upon an exit in favorable market conditions, and to a lesser extent on liquidity events. The capital markets for public offerings and acquisitions are dynamic and the likelihood of successful liquidity events for the companies we have invested in could significantly worsen. Further, valuations of privately held companies are inherently complex due to the lack of readily available market data.

As the enterprise cloud computing ecosystem has matured, the opportunities in which we can invest have expanded to include investments in companies in connection with or as part of such company’s initial public offering or other transaction directly or indirectly resulting in it being publicly traded, in addition to our investments in early-to-late-stage private companies. Therefore, our investment strategy and portfolio have also expanded to include public companies. In certain cases, our ability to sell these investments may be constrained by contractual obligations to hold the securities for a period of time after a public offering, including market standoff agreements and lock-up agreements.

We record all fair value adjustments of our publicly traded and privately held equity investments through the condensed consolidated statement of operations. As a result, we may experience additional volatility to our statements of operations due to changes in market prices of our investments in publicly held equity investments and the valuation and timing of observable price changes or impairments of our investments in privately held securities. Our ability to mitigate this volatility in any given period may be impacted by our contractual obligations to hold securities for a set period of time. For example, some of our investments in publicly traded securities may be subject to lock-up agreements, which would prevent our ability to sell these investments after a public offering or otherwise impede our ability to mitigate market volatility in such securities. Volatility in the financial markets has in the past and could in the future be material to our results in any given quarter and may cause our stock price to decline. While historically our investment portfolio has had a positive impact on our financial results, that may not be true for future periods, particularly in periods of significant market fluctuations which affect our strategic investments portfolio.

All of our investments, especially our investments in privately held companies, are subject to a risk of a partial or total loss of investment capital. In addition, in the future we may deploy material investments in individual investee companies, resulting in the increasing concentration of risk in a small number of companies. Changes in the fair value or partial or total loss of investment capital of these individual companies could be material to our financial statements.

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

Our success depends on the willingness of a growing community of third-party developers and technology providers to build applications and provide integrations, data and content that are complementary to our services. Without the continued development of these applications and provision of such integrations, data and content, both current and potential customers may not find our services sufficiently attractive, which could impact future sales. In addition, for those customers who authorize a third-party technology partner access to their data, we do not provide any warranty related to the functionality, security or integrity of the data access, transmission or processing. Despite contract provisions to protect us, customers may look to us to support and provide warranties for the third-party applications, integrations, data and content, even though not developed or sold by us, which may expose us to potential claims, liabilities and obligations, all of which could harm our reputation and our business.

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

Positions we take (or choose not to take) on social and ethical issues may be unpopular with some of our employees or with our customers or potential customers, which has in the past impacted and may in the future impact our ability to attract or retain customers. We also may choose not to conduct business with potential customers or discontinue or not expand business with existing customers due to these positions. Further, actions taken by our customers and employees, including through the use or misuse of our products or new technologies for sharing information (such as Slack), may result in reputational harm or possible liability. For example, we have been subject to allegations in legal proceedings that we should be liable for the use of

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certain of our products by third parties. Although we believe that such claims lack merit, such claims could cause reputational harm to our brand or result in liability.

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

Our brand is also associated with our public commitments to sustainability, equality and ethical use, and any perceived changes in our dedication to these commitments could harm our reputation or brand and could adversely impact our relationships with our customers. Our disclosures on these matters, and standards we set for ourselves or a failure to meet these standards, may influence our reputation and the value of our brand. For example, we have elected to share publicly certain information about our corporate environmental, social and governance (“ESG”) initiatives and our commitment to the recruitment of a diverse workforce. Our business may face increased scrutiny related to these activities, including from the investment community, and our failure to achieve progress in these areas on a timely basis, or at all, could adversely affect our reputation, business, financial performance and growth.

Legal and Regulatory Risks

Privacy concerns and laws ~~such~~ as ~~the European Union’s General Data Protection Regulation,~~well as evolving regulation of cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations may limit the use and adoption of our services and adversely affect our business.

Regulation related to the provision of services over the Internet is evolving, as federal, state and foreign governments continue to adopt new, or modify existing, laws and regulations addressing data privacy, cybersecurity, data protection, data sovereignty and the collection, processing, storage, transfer and use of ~~data.~~data, generally. In some cases, ~~new~~ data privacy laws and regulations, such as the European Union’s ~~("EU"~~(“EU”) General Data Protection Regulation (“GDPR”) that ~~takes~~took effect in ~~May~~ 2018, ~~and an amended Act on the Protection of Personal Information in Japan,~~ impose ~~new~~ obligations directly on Salesforce as both a data controller and a data processor, as well as on many of our customers. ~~These~~In addition, new laws may require us to make changes to our services to enable Salesforce and/or our customers to meet the new legal requirements, and may also increase our potential liability exposure through higher potential penalties for non-compliance. Further,domestic data privacy laws, such as the ~~European Union’s~~California Consumer Privacy Act (“CCPA”), which took effect in 2020, the California Privacy Rights Act, which will amend the CCPA in January 2023, the Virginia Consumer Data Protection Act, which also goes into effect in January 2023, and the Colorado Privacy Act, which goes into effect in July 2023, similarly impose new obligations on us and many of our customers, potentially as both businesses and service providers. These laws continue to evolve and as various states introduce similar proposals, we and our customers could be exposed to additional regulatory burdens. Further, laws and legislative proposals such as the EU’s proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes, and the tracking of individuals’ online activities.

Although we monitor the regulatory environment and have invested in addressing these developments, these laws may require us to make additional changes to our practices and services to enable us or our customers to meet the new legal requirements, and may also increase our potential liability exposure through new or higher potential penalties for noncompliance, including as a result of penalties, fines and lawsuits related to data breaches. These new or proposed laws and regulations are subject to differing interpretations and may be inconsistent among jurisdictions. These and other requirements could reduce demand for our services, require us to take on more onerous obligations in our contracts, restrict our ability to store, transfer and process data or, in some cases, impact our ability or our customers' ability to offer our services in certain locations, ~~or our customers' ability~~ to deploy our solutions, to reach current and prospective customers, or to derive insights from customer data globally. For example, ~~ongoing legal challenges in Europe to~~on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework, one of the mechanisms ~~allowing~~that allowed companies, including Salesforce, to transfer personal data from the European Economic Area (“EEA”) to the United ~~States could result in further limitations~~States. In addition, the CJEU commented that companies relying on another such mechanism, the ~~ability~~European Commission’s Standard Contractual Clauses, should assess on a case-by-case basis whether the law of the country of destination ensures adequate protection of personal data transferred under EU law, by providing, where necessary, additional safeguards to those offered by those clauses. Salesforce relies upon Binding Corporate Rules, a third mechanism, which provides additional safeguards with respect to government requests for EU personal data, as well as the European Commission’s Standard Contractual Clauses to transfer EU personal data internationally. Depending on how the CJEU’s decision is enforced, the cost and complexity of providing our services in certain markets may increase. Based on recommendations recently issued by the European Data Protection Board (“EDPB”), a body of privacy regulators from across ~~borders, particularly if governments~~the EU charged with ensuring consistent application of GDPR, current indications are ~~unable or unwilling~~that, absent agreement on a new bilateral cross-border transfer mechanism to ~~reach new or maintain existing agreements that support cross-border data transfers, such as~~replace the ~~EU-U.S. and Swiss-U.S.~~EU-US Privacy Shield ~~framework. Additionally,~~Framework, regulators may be inclined to interpret the decision as significantly restricting certain cross-border transfers. Certain countries outside of the EEA (e.g., Russia, China and India) have also passed or are considering passing laws requiring varying degrees of local data residency. By way of further example, statutory damages available through a private right of action for certain data breaches under CCPA, and potentially

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other states’ laws, may increase our and our customers’ potential liability and the demands our customers place on us. The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our services, reduce overall demand for our services, make it more difficult to meet expectations from or commitments to customers and our customers’ customers, lead to significant fines, penalties or liabilities for noncompliance, impact our reputation, or slow the pace at which we close sales transactions, in particular where customers request specific warranties and unlimited indemnity for noncompliance with privacy laws, any of which could harm our business.

In addition to government activity, privacy ~~advocacy~~advocates and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on our ability to provide our services globally. Our customers expect us to meet voluntary certification and other standards established by third parties, such as TRUSTe. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business. In addition, we have seen a trend toward the private enforcement of data protection obligations, including through private actions for alleged noncompliance, which could harm our business and negatively impact our reputation. For example, in 2020 we were made a party to a legal proceeding brought by a Dutch privacy advocacy group on behalf of certain Dutch citizens that claims we violated the GDPR and Dutch Telecommunications Act through the processing and sharing of data in connection with our Audience Studio and Data Studio products. We were also named as a defendant in a similar lawsuit brought in the UK. Although we believe that these claims lack merit, these or similar future claims could cause reputational harm to our brand or result in liability.

Furthermore, the uncertain and shifting regulatory environment and trust climate may raise concerns regarding data privacy and cybersecurity, which may cause our customers or our customers’ customers to resist providing the data necessary to allow our customers to use our services effectively. In addition, new products we develop or acquire (such as Slack) in connection with changing events may expose us to liability or regulatory risk. Even the perception that the privacy and security of personal information isare not satisfactorily protected or ~~does~~do not meet regulatory requirements could inhibit sales of our products or services and could limit adoption of our cloud-based solutions.

~~Our ability to deliver our services is dependent on the development and maintenance of the infrastructure of the Internet by third parties.~~

The Internet’s infrastructure is comprised of many different networks and services that are highly fragmented and distributed by design. This infrastructure is run by a series of independent third-party organizations that work together to provide the infrastructure and supporting services of the Internet under the governance of the Internet Corporation for Assigned Numbers and Names (ICANN) and the Internet Assigned Numbers Authority (IANA), now under the stewardship of ICANN.

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

In addition, certain countries have implemented legislative and technological actions that either do or can effectively regulate access to the Internet. These actions could potentially limit or interrupt access to our services from certain countries or Internet Service Providers and result in the loss of potential or existing customers and harm our business.

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)~~(“PCI”) Data Security Standards, may have an adverse impact on our business and results. If in the future we are unable to achieve or maintain industry-specific certifications or other requirements or standards relevant to our customers, it may harm our business and adversely affect our results.

Further, in some cases, industry-specific, regionally-specific or product-specific laws, regulations or interpretive positions may ~~also apply directly~~impact our ability, as well as the ability of our customers, partners and data providers, to ~~us as a service provider.~~collect, augment, analyze, use, transfer and share personal and other information that is integral to certain services we provide. The interpretation of many of these statutes, regulations and rulings is evolving in the courts and administrative agencies and an inability to comply may have an adverse impact on our business and results. This impact may be particularly acute in countries that have passed or are considering passing legislation that requires data to remain localized “in country,” as this may impose financial costs on companies required to store data in jurisdictions not of their choosing and to use nonstandard operational processes that add complexity and are difficult and costly to integrate with global processes. This is also true with respect to countries that may be considering legal frameworks on artificial intelligence, which is a trend that may increase now that the European Commission has proposed the first such framework. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business. ~~For example, there~~

There are various statutes, regulations and rulings relevant to the direct email marketing and text-messaging industries, including the Telephone Consumer Protection Act ~~(TCPA)~~(“TCPA”) and related Federal Communication Commission ~~(FCC)~~ orders, which impose significant restrictions on the ability to utilize telephone calls and text messages to mobile telephone numbers as a means of communication, when the prior consent of the person being contacted has not been obtained. We ~~are,~~have been, and may in the future be, subject to one or more class-action lawsuits, as well as individual lawsuits, containing allegations that one of our businesses or customers violated the TCPA. A determination that we or our customers violated the TCPA or other

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communications-based statutes could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business.

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

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

~~on-premises offerings from enterprise software application vendors;~~

~~cloud computing application service providers, either individually or with others;~~

~~marketing vendors, which may be specialized in advertising, targeting, messaging, or campaign automation;~~

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

~~traditional platform development environment companies;~~

~~cloud computing development platform companies;~~

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

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

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

~~artificial intelligence solutions from new startups and established companies.~~

Many of our current and potential competitors may have competitive advantages, such as greater name recognition, longer operating histories, significant installed bases, broader geographic scope, and larger marketing budgets, as well as substantially greater financial, technical, 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.

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, platforms and personnel;~~

•~~diversion of financial and managerial resources from existing operations;~~

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

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

~~potential loss of key employees of the acquired company;~~

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

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

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

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

~~increasing or maintaining the security standards for acquired 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;~~

~~additional stock based compensation; the loss of acquired deferred revenue and unbilled deferred revenue;~~

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

~~ineffective or inadequate controls, procedures and policies at the acquired company may negatively impact our results of operations;~~

~~challenges caused by integrating operations over distance, and~~jurisdictions across ~~different languages and cultures;~~

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

~~the tax effects of any such acquisitions.~~

Any of these risks could harm our business. In addition, to facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions or investments, and which may affect the risks of owning our common stock. For example, if we finance acquisitions by issuing equity or convertible or other debt securities or loans, our existing stockholders may be diluted, or we could face constraints related to the terms of, and repayment obligation related to, the incurrence of indebtedness that could affect the market price of our common stock.

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

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

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

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

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

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

~~the attrition rates for our services;~~

~~the 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;~~

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

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;

~~variations in the revenue mix of our services and growth rates of our cloud subscription and support offerings;~~

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

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

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;

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

~~changes in foreign currency exchange rates such as with respect to the British Pound;~~

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

~~the number of new employees;~~

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

~~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;~~

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

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

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

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

~~income tax effects;~~

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

~~technical difficulties or interruptions in our services;~~

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

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

~~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;~~

~~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;~~

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

~~regulatory compliance costs; and~~

the impact of new accounting pronouncements and associated system implementations, for example, the adoption of Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which includes the accounting for revenue recognized and capitalized costs.

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

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

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

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

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

We derive substantially all of our revenue from subscriptions to our CRM enterprise cloud computing application services, and we expect this will continue for the foreseeable future. Our efforts to expand our services beyond the CRM market may not succeed and may reduce our revenue growth rate. The markets for our Analytics, IoT, Commerce and Salesforce Quip Clouds remain relatively new and it is uncertain whether our efforts will ever result in significant revenue for us. Further, the

introduction of significant platform changes and upgrades, including our conversion to our new Lightning platform, and introduction of new services beyond the CRM market, may not be successful, and early stage interest and adoption of such new services may not result in long term success or significant revenue for us.

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 over various network technologies and on a variety of mobile devices, operating systems and computer hardware and software platforms using a standard browser, we will need to continuously modify and enhance our services to keep pace with changes in Internet-related hardware, software, communication, browser, app development platform and database technologies. We may not be successful in either developing these modifications and enhancements or in bringing them to market timely. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase our research and development or service delivery expenses. Any failure of our services to operate effectively with future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and harm our business.

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

~~We sell our services throughout~~ the world are currently considering changes to antitrust and ~~are subject~~competition laws, regulations or interpretative positions to ~~risks~~enhance competition in digital markets and ~~challenges associated with international business. We intend~~address practices by certain digital platforms that they perceive to continue to expand our international sales efforts. The risks and challenges associated with sales to customers outside the United States or those that can affect international operations generally, include:

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

be anticompetitive. These regulatory ~~frameworks or 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;~~

~~evolving domestic and international tax environments;~~

~~liquidity issues or political actions by sovereign nations, which~~efforts could result in ~~decreased values of these balances~~laws, regulations or ~~potential difficulties protecting our foreign assets or satisfying local obligations;~~

~~foreign currency fluctuations and controls;~~

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

~~regional data privacy laws and other regulatory requirements~~interpretative positions 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.~~

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 contractual subscription period, which is typically 12 to 36 months, and in the normal course of business, some customers have elected not to renew. In addition, our customers may renew for fewer subscriptions, renew for shorter contract lengths, or switch to lower cost offerings of our services. It is difficult to predict attrition rates given our varied customer base of enterprise and small and medium size business customers and the number of multi-year subscription contracts. Our attrition rates may increase or fluctuate as a result of a number of factors, including customer dissatisfaction with our services, customers’ spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes and deteriorating general economic conditions.

Our success depends on the willingness of third-party developers and technology providers to build applications and provide integrations that are complementary to our services. Without the development of these applications and integrations, 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 and integrations, which may expose us to potential claims, liabilities and obligations for applications we did not develop or sell, all of which could harm our business.

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

We conduct our business in the following regions: the Americas, Europe, and Asia Pacific. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, additional headcount in foreign locations, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations primarily in British Pound Sterling, Euro, Japanese Yen, Canadian Dollar and Australian Dollar against the U.S. Dollar. 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. Although we attempt to mitigate some of this volatility and related risks through foreign currency hedging, our hedging activities are limited and may not effectively offset the adverse financial impacts that may result from unfavorable movements in foreign currency exchange rates, which could adversely affect our financial condition or results of operations. Additionally, recent events, including the United Kingdom’s 2016 vote in favor of exiting the European Union, or “Brexit,” and similar geopolitical developments and uncertainty in the European Union and elsewhere could amplify the volatility of currency fluctuations and related risks for our business.

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.

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

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

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

~~For large enterprise customers, professional services may also be performed by a third party or a combination~~change certain 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 usbusiness practices, undertake new compliance obligations 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,otherwise may ~~further damage~~have an adverse impact on our business ~~by affecting our ability to compete for new business with current~~ and ~~prospective customers.~~results.

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, as well as commercial, corporate and securities, labor and employment, class actions, wage and hour, antitrust, data privacy and other matters.

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

~~In addition, we~~ We have also been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights. Our technologies may be subject to injunction if they are found to infringe the rights of a ~~third-party~~third party or we may be required to pay damages, or both. Further, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.

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

Our exposure to risks associated with various claims, including claims related to the use of intellectual property as well as securities and related stockholder derivative claims, may be increased as a result of acquisitions of other companies. For example, we are subject to ongoing securities class action litigation and related stockholder derivative claims brought against Tableau and Slack that remain outstanding, and as to which we may ultimately be subject to liability or settlement costs. Additionally, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard against infringement risks with respect to acquired companies or technologies. In addition, third parties have made claims in connection with our acquisitions and may do so in the future, and they may also make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition.

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

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

Any failure to ~~protect~~obtain registration or protection of our intellectual property rights could impair our ability to protect our proprietary technology and our ~~brand.~~brand, causing us to incur significant expenses and harm our business.

If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, affecting our brand, causing us to incur significant expenses and harming our ~~business may be harmed. In addition, defending our intellectual property rights may entail significant expense.~~business. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have many U.S. patents and pending U.S. and international patent applications, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Similar uncertainty applies to our U.S. and international trademark registrations and applications. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of protection for some intellectual property rights in the U.S. and elsewhere. Effective patent, trademark, copyright and trade secret protection

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may not be available to us in every country in which our services are ~~available.~~available and legal changes and uncertainty in various countries’ intellectual property regimes may result in making conduct that we believe is lawful to be deemed violative of others’ rights. The laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. Also, our involvement in ~~standard setting~~standard-setting activity, our contribution to open source projects, various competition law regimes or the need to obtain licenses from others may require us to license our intellectual ~~property.~~property in certain circumstances. Accordingly, despite our efforts, we may be unable to prevent third parties from using our intellectual property.

We may be required to spend significant resources and expense to monitor and protect our intellectual property ~~rights and we may conclude that in at least some instances the benefits of protecting our intellectual property rights may be outweighed by the expense.~~rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. ~~Any~~If we fail to protect our intellectual property rights, it could impact our ability to protect our technology and brand. Furthermore, any litigation, whether or not it is resolved in our favor, could result in significant expense to us, cause us to divert time and resources from our core business, and harm our business.

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

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.

After the ~~efforts~~mergers were announced, seven lawsuits were filed by purported Slack stockholders in the United States District Court for the Northern District of California and six lawsuits were filed by purported Slack stockholders in the United States District Court for the Southern District of New York, each in connection with the mergers. The complaints named as defendants Slack, the members of the Slack board, and, with respect to three of the actions, Salesforce, and alleged, among other things, that the defendants caused a materially incomplete and misleading proxy statement relating to the proposed mergers to be filed with the SEC in violation of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and that Slack’s board of directors breached their fiduciary duties in connection with the mergers. On February 22, 2021, Slack filed a Current Report on Form 8-K in which it voluntarily made supplemental disclosures relating to the proposed mergers. By March 5, 2021, all thirteen of the cases had been voluntarily dismissed.

There can be no assurance that any of the defendants will be successful in the outcome of any lawsuits filed in connection with the acquisition of Slack. The defense or settlement of any such lawsuit or claim may adversely affect our business, financial condition, results of operations and cash flows.

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

Our contracts with federal, state, local and foreign government entities are subject to various procurement regulations and other requirements relating to their formation, administration and performance. We may be subject to audits and investigations relating to our government contracts, and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refunding or suspending of payments, forfeiture of profits, payment of fines, and suspension or debarment from future government business. In addition, such contracts may provide for termination by the government at any time, without cause, and termination of any such contract may adversely impact our other existing or prospective government contracts. Any of these risks related to contracting with governmental entities could adversely impact our future sales and operating results.

We are subject to governmental sanctions and export and import controls that could impair our ability to compete in international markets and may subject us to liability if we are not in full compliance with applicable laws.

Our solutions are subject to export and import controls where we conduct our business activities, including the U.S. Commerce Department’s Export Administration Regulations, U.S. Customs regulations, U.S. supply chain regulations and various economic and trade sanctions regulations established by the U.S. Treasury Department’s Office of Foreign Assets Control. If we fail to comply with applicable trade laws, we and certain of our ~~technical~~employees could be subject to substantial civil or criminal penalties, including the possible loss of trade privileges; fines, which may be imposed on us and ~~management personnel.~~responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers. Obtaining necessary authorizations, including any required licenses, may be time-consuming, require expenditure of corporate resources, is not guaranteed, and may result in the delay or loss of sales opportunities or the ability to realize value from certain acquisitions or engagements. Furthermore, U.S. export control laws and economic sanctions may prohibit or limit the transfer of certain products and services to U.S. embargoed or sanctioned countries, governments and parties. Even though we take precautions to prevent our solutions from being provisioned or provided to U.S. sanctions targets in violation of applicable regulations, our solutions could be provisioned to those targets or provided by our resellers despite such precautions. Any such sales could have negative consequences, including government investigations, penalties and reputational harm. Changes in our solutions or

~~Our continued success depends~~

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changes in trade regulations may create delays in the introduction, sale and deployment of our solutions in international markets or prevent the export or import of our solutions to certain countries, governments or persons altogether. Any decreased use of our solutions or limitation on our ability to ~~maintain~~export or sell our solutions may adversely affect our business, financial condition and ~~enhance~~results of operations. Import and export control regulations in the U.S. and other countries are subject to change and uncertainty, including as a result of geopolitical developments and relations between the United States and China.

Financial Risks

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

We ~~believe~~generally recognize revenue from customers ratably over the terms of their subscription and support agreements, which are typically 12 to 36 months. As a result, most of the revenue we report in each quarter is the result of subscription and support agreements entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any one quarter may not be reflected in our revenue results for that 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 strengthquarter. Any such decline, however, will depend largely on our ability to remain a technology leader and continue to provide high-quality innovative products, services, and features securely, reliably and in a manner that enhances our customers' success. In order to maintain and enhance our brands, we may be required to make substantial investments that may later prove to be unsuccessful. In addition, positions we take on social issues may be unpopular with some customers or potential customers, which maynegatively impact our ~~ability to attract or retain such customers. If we fail to maintain~~revenue in future quarters. Accordingly, the effect of significant downturns in sales 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 complexitymarket acceptance of our services, and ~~technologies. We do~~changes in our attrition rate, may not ~~have employment agreements~~be fully reflected in our results of operations until future periods, including changes resulting from the effects of the COVID-19 pandemic. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription and support term.

If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with ~~any~~our revenue forecasts, our business could be harmed and the market price of our ~~executive officers, key management, development or operations personnel~~common stock could decline.

Due to the unpredictability of future general economic and ~~they could terminate their employment with us at any time. The loss~~financial market conditions, the pace of ~~one or more~~change and innovation in enterprise cloud computing services, the impact of foreign currency exchange rate fluctuations, the growing complexity of our ~~key employees or groups could seriously harm~~business, including the use of multiple pricing and packaging models and the increasing amount of revenue from software license sales, and our ~~business.~~

~~In the technology industry, there is substantial~~increasing focus on enterprise cloud computing services, we may not be able to realize our projected revenue growth plans. We plan our expense levels and ~~continuous competition for engineers with high levels~~investment on estimates of ~~experience in designing, developing~~future revenue and ~~managing software and Internet-related services, as well as competition for sales executives, data scientists and operations personnel.~~future anticipated rate of growth. We may not be ~~successful~~able to adjust our spending appropriately if the addition of new subscriptions or the renewals of existing subscriptions fall short of our expectations, and unanticipated events may cause us to incur expenses beyond what we anticipated. A portion of our expenses may also be fixed in ~~attracting~~nature for some minimum amount of time, such as with costs capitalized to obtain revenue contracts, data center and ~~retaining qualified personnel. We have from time~~infrastructure service contracts or office leases, so it may not be possible to ~~time experienced, and~~reduce costs in a timely manner, or at all, without the payment of fees to exit certain obligations early. As a result, we expect that our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis and revenue growth rates may not be sustainable and may decline in the future, and in some periods, we have not been able to, ~~continue~~and may not be able in the future to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. These difficulties may be amplified by evolving restrictions on immigration, travel or availability of visas for skilled technology workers. If we fail to attract new personnel or fail to retain and motivate our current personnel,provide continued operating margin expansion, which could harm our business and ~~future growth prospects could be severely harmed.~~

~~In addition, we believe in~~cause the ~~importance~~market price of our corporate culture of Ohana, which fosters dialogue, collaboration, recognition and a sense of family. As our organization grows and expands globally, and as employees’ workplace expectations develop, we may find it increasingly difficultcommon stock to ~~maintain the beneficial aspects of our corporate culture. This could negatively impact our future success.~~

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

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

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

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

Unanticipated changes in our effective tax rate and additional tax liabilities and global tax developments may impact our financial results.

We are subject to income taxes in the United States and various jurisdictions outside of the United States. Significant judgment is often required in the determination of our worldwide provision for income taxes. Our effective tax rate could ~~fluctuate due to~~be impacted by changes in ~~the mix of~~our earnings and losses in countries with differing statutory tax ~~rates. Our tax expense could also be impacted by~~rates, changes in operations, changes in non-deductible expenses, changes in excess tax benefits of stock-based compensation, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes, ~~and~~ effects from acquisitions, and changes in accounting principles and tax laws. Any changes, ambiguity or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies and positions could also materially impact our income tax liabilities.

We may also be subject to additional tax liabilities and penalties due to changes in non-income based taxes resulting from changes in federal, state, local or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, or changes to our business operations, including as a result of acquisitions. Any resulting increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results.

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

~~Our~~As our business continues to grow, increasing our brand recognition and profitability, we may be subject to increased scrutiny and corresponding tax ~~provision could also~~disputes, which may impact our cash flows and financial results. Furthermore, our growing prominence may bring public attention to our tax profile, and if perceived negatively, may cause brand or reputational harm.

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As we utilize our tax credits and net operating loss carryforwards, we may be ~~impacted by changes~~unable to mitigate our tax obligations to the same extent as in accounting principles, changes in U.S. federal and state or international tax laws applicable to corporate multinationals. Countries such as the United Kingdom and Australia have enacted new legislation in recentprior years, ~~while other countries are currently considering fundamental law changes. In particular, U.S. lawmakers recently proposed many significant changes that~~which could have a material impact onto our future cash flows. In addition, changes to our operating structure, including changes related to acquisitions, may result in cash tax obligations.

Global tax developments applicable to multinational businesses may have a material impact to our business, cash flow from operating activities, or financial ~~statements. Additionally, changes in taxing jurisdictions' administrative interpretations, decisions, policies and positions could also impact our tax liabilities.~~

Weresults. Such developments, for example, may also be subject to additional tax liabilities and penalties due to changes in non-income based taxes resulting from changes in federal, state or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, changes

include the Biden Administration’s proposed increases to the U.S. corporate income tax rate, minimum tax on book income, and increased taxation of international business operations, ~~including acquisitions,~~ as well as the ~~evaluation~~Organization for Economic Co-operation and Development’s, the European Commission’s and certain major jurisdictions’ heightened interest in and taxation of ~~new information~~companies participating in the digital economy. Furthermore, governments’ responses to the economic impact of COVID-19 may lead to tax rule changes that could materially and adversely affect our cash flows and financial results.

We are exposed to fluctuations in currency exchange rates that have in the past and could in the future negatively impact our financial results and cash flows from changes in athe value of the U.S. Dollar versus local currencies and the Euro versus the British Pound Sterling.

We primarily conduct our business in the following regions: the Americas, Europe and Asia Pacific. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets, including in emerging markets. This exposure is the result of selling in multiple currencies, growth in our international investments, including data center expansion, additional headcount in foreign locations, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to currency fluctuations primarily in Euro, British Pound Sterling, Japanese Yen, Canadian Dollar, Australian Dollar and Brazilian Real against the U.S. Dollar as well as the Euro against the British Pound Sterling. These exposures may change over time as business practices evolve, economic and political conditions change and evolving tax regulations come into effect. The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and expenses for any given fiscal period. Furthermore, fluctuations in foreign currency exchange rates can affect our ability to ~~a tax position taken~~accurately predict our future results and earnings. Additionally, global events as well as geopolitical developments, fluctuating commodity prices and trade tariff developments, have caused and may in ~~a prior period.~~the future cause global economic uncertainty and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations. Although we attempt to mitigate some of this volatility and related risks through foreign currency hedging, our hedging activities are limited in scope and may not effectively offset the adverse financial impacts that may result from unfavorable movements in foreign currency exchange rates, which could adversely impact our financial condition or results of operations.

Our debt service obligations, ~~and operating~~ lease commitments and other contractual obligations may adversely affect our financial condition, results of operations and cash ~~flows from operations.~~flows.

~~We have~~As of July 31, 2021, we had a substantial level of outstanding debt, including ~~the 0.25% convertible senior notes we issued in March 2013 (“0.25%~~our Senior ~~Notes”) due April 1, 2018,~~Notes and the loan we assumed when we purchased ~~an office building located at~~ 50 ~~Fremont Street in San Francisco, California (“50 Fremont”),~~Fremont. We are also party to the ~~$500.0 million term loan~~Revolving Loan Credit Agreement, which provides for our $3.0 billion Credit Facility. There were no outstanding borrowings under the Credit Facility as of July 31, 2021. We may use the proceeds of future borrowings under the Credit Facility for general corporate purposes, which may include, without limitation, financing the consideration for and fees, costs and expenses related to ~~finance our acquisition of Demandware, due July 11, 2019 (the “term loan”)~~any acquisition.

In addition to the outstanding and ~~capital lease arrangements. Additionally,~~potential debt obligations above, we have also recorded substantial liabilities associated with noncancellable future payments on our long-term lease agreements. We also have significant other contractual commitments, ~~in operating lease arrangements,~~such as commitments with infrastructure service providers, 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. In July 2016, we amended and restated our revolving credit facility under which we can draw down up to $1.0 billion.

Maintenance of our indebtedness and contractual commitments and any additional issuances of indebtedness could:

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

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

•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 and term loan 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.general.

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

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be obtained on terms that are favorable or acceptable to us. Any new or refinanced debt may be subject to substantially higher interest rates, which could adversely affect our financial condition and impact our business. In addition, we may seek debt financing to fund future acquisitions following the Slack acquisition. We can offer no assurance that we can obtain debt financing on terms acceptable to us, if at all.

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

The indenture governing our Senior Notes and the Revolving Loan Credit Agreement impose restrictions on us and require us to maintain compliance with specified covenants. Our ability to comply with these covenants may be affected by events beyond our control. A failure to comply with the covenants and other provisions of our outstanding debt could result in events of default under such instruments, which could permit acceleration of all of our ~~notes~~debt and borrowings. Any required repayment of our ~~notes or revolving credit facility~~debt as a result of a fundamental change or other acceleration would lower our current cash on hand such that we would not have those funds available for use in our business.

~~New lease~~Lease accounting guidance ~~will require~~requires that we record a liability for operating lease activity on our condensed consolidated balance sheet, ~~no later than fiscal 2020,~~ which ~~will result in an increase in~~increases both our assets and ~~financing obligations. The implementation of this guidance~~liabilities and therefore may impact our ability to obtain the necessary financing from financial institutions at commercially viable rates or at ~~all as this new guidance~~all. Our lease terms may include options to extend or terminate the lease. Periods beyond the noncancellable term of the lease are included in the measurement of the lease liability and associated asset only when it is reasonably certain that we will ~~result~~exercise the associated extension option or waive the termination option. We reassess the lease term if and when a significant event or change in ~~a higher financing obligation on~~circumstances occurs within our ~~consolidated balance sheet.~~

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

~~Our overall performance depends in part on worldwide economic and geopolitical conditions.~~control. The United States and other key international economies have experienced cyclical downturns from time to time in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. These economic conditions can arise suddenly and the fullpotential impact of such conditions can remain uncertain. In addition, recent geopolitical developments, including Brexit, have increased levels of political and economic unpredictability globally, and may increase the volatility of global financial markets; the impact of such developments on the global economy remains uncertain. Moreover, these ~~conditions can affect the rate of information technology spending and~~options to extend 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~~be material to our ~~operations, international commerce~~financial position 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. Our corporate headquarters, and a significant portion of our research and development activities, 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.~~results.

Current and future accounting pronouncements and other financial and nonfinancial reporting standards ~~especially but not only concerning revenue recognition, cost capitalization and lease accounting,~~ may negatively impact our financial results.

We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and ~~drafts thereof~~interpretations that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we ~~might~~may be required to change our accounting policies, ~~particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting,~~ to alter our operational policies, ~~and~~ to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, orand to ~~restate~~adjust our published financial statements. Such changes may have an adverse effect on our ~~reputation,~~ business, financial position and ~~profit,~~operating results, or cause an adverse deviation from our revenue and operating profit ~~target,~~targets, which may negatively impact our financial results.

WeIn addition, as we work to align with the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (“TCFD”), the Value Reporting Foundation and our own ESG materiality assessment, we have expanded and, in the future, may continue to expand our disclosures in these areas. Statements about our ESG initiatives and goals, and progress against those goals, may be ~~subject~~based on standards for measuring progress that are still developing, internal controls and processes that continue to ~~risks related to government contracts~~evolve, and ~~related procurement regulations.~~

~~Our contracts with federal, state, local, and foreign government entities~~assumptions that are subject to ~~various procurement regulations~~change in the future. Our failure to report accurately or achieve progress on our metrics on a timely basis, or at all, could adversely affect our reputation, business, financial performance and ~~other requirements relating~~growth.

Risks Related to ~~their formation, administration~~Owning Our Common Stock

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

Our quarterly results are likely to fluctuate. Fluctuations have occurred due to known and ~~performance. We may be subject~~unknown risks, including the sudden and unanticipated effects of the COVID-19 pandemic. In addition, our fiscal fourth quarter has historically been our strongest quarter for new business and renewals, and the year-over-year compounding effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of invoices that we generate in the fourth quarter to ~~audits and investigations relating~~continually increase in proportion to our ~~government~~billings in the other three quarters of our fiscal year. As a result, our fiscal first quarter has typically in the past been our largest collections and operating cash flow quarter.

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

•general economic or geopolitical conditions, including the impacts of the COVID-19 pandemic and recent surges throughout the world, which can adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay prospective customers’ purchasing decisions, reduce the value of new subscription contracts, ~~and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contract, refunding~~ or suspending of payments, forfeiture of profits, payment of fines, and suspension or debarment from future government business. In addition, such contracts may provide for termination by the government at any time, without cause.affect attrition rates;

~~We are subject to governmental export and import controls that could impair~~ •our ability to ~~compete~~retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;

•the attrition rates for our services;

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•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 ~~international markets~~selling our services to large enterprises;

•changes in unearned revenue and ~~subject us~~remaining performance obligation, due to ~~liability if we are not~~seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term, the collectability of invoices related to multi-year agreements, the timing of license software revenue recognition, or fluctuations due to foreign currency movements, all of which may impact implied growth rates;

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

•variations in ~~full compliance with applicable laws.~~

~~Our solutions are subject to export~~the revenue mix of our services and ~~import controls,~~growth rates of our subscription and support offerings, including the ~~Commerce Department’s Export Administration Regulations, U.S. Customs regulations~~timing of software license sales and ~~various economic~~sales offerings that include an on-premise software element for which the revenue allocated to that deliverable is recognized upfront;

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

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

•expenses associated with our pricing policies and terms of contracts, such as the costs of customer SMS text usage paid by us and the related impacts to our gross margin;

•changes in payment terms and the timing of customer payments and payment defaults by customers as have been and may continue to be impacted by the ~~Treasury Department’s Office~~effects of ~~Foreign Assets Control.~~the COVID-19 pandemic;

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

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

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

•the number of new employees;

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

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

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

•expenses related to our real estate or changes in the nature or extent of our use of existing real estate, including our office leases and our data center capacity and expansion;

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

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

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

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

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

•technical difficulties or interruptions in our services;

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

•conditions, and particularly sudden changes, in the financial markets, such as the volatility caused by the COVID-19 pandemic, which have impacted and may continue to impact the value and liquidity of our investment portfolio;

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

•equity or debt issuances, including as consideration in or in conjunction with acquisitions;

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

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

•regulatory compliance and acquisition costs; and

•the impact of new accounting pronouncements and associated system implementations.

Many of these factors are outside of our control, and the occurrence of one or more of them might cause our operating results to vary widely. If we fail to ~~comply with these U.S. export control laws~~meet or exceed operating results expectations or if securities analysts and ~~import laws we~~investors have estimates and ~~certain~~forecasts of our ~~employees could be subject to substantial civil~~future performance that are unrealistic or ~~criminal penalties, including~~that we do not meet, the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers. Obtaining the necessary authorizations, including any required license, may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities. Furthermore, the U.S. export control laws and economic sanctions laws prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, governments and persons. Even though we take precautions to prevent our solutions from being provisioned or provided to U.S. sanctions targets, our solutions could be provisioned to those targets or provided by our resellers despite such precautions. Any such sales could have negative consequences, including government investigations, penalties and reputational harm. Changes in our solutions or changes in export and import regulations may create delays in the introduction, sale and deploymentmarket price of our ~~solutions in international markets~~common stock could decline. In addition, if one or ~~prevent~~more of the ~~export or import~~securities analysts who cover us adversely change their recommendations regarding our stock, the market price of our solutions to certain countries, governments or persons altogether. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our business, financial condition and results of operations.

~~Risks Relating to Our Convertible Senior Notes and Our Common Stock~~common stock could decline.

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

The trading prices of the securities of technology companies have historically been highly volatile. Accordingly, the market price of our ~~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~~unearned revenue, remaining performance obligation, year-over-year growth rates for individual ~~core~~ service offerings and other financial metrics and non-financial metrics, such as transaction usage volumes and other usage metrics, and how those results compare to analyst expectations;

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

•forward-looking guidance to industry and financial analysts related to, for example, future revenue, current remaining performance obligation, cash flows from operating activities and earnings per ~~share;~~share, the accuracy of which may be impacted by various factors, many of which are beyond our control, including general economic and market conditions and unanticipated delays in the integration of acquired companies as a result of regulatory review;

•our ability to meet or exceed forward-looking guidance we have given or to meet or exceed the expectations of investors, analysts or others; our ability to give forward-looking guidance consistent with past practices; and changes to or withdrawal of previous guidance or long-range targets;

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

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

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

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

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

•recruitment or departure of key personnel;

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

•the economy as a whole, geopolitical conditions, including global trade and health concerns, market conditions in our industry and the industries of our customers;

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

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

•issuance of debt or other convertible ~~securities.~~securities;

•the inability to conclude that our internal controls over financial reporting are effective;

•changes to our credit ratings; and

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

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In addition, if the market for technology stocks or the ~~stock~~greater securities market, including debt offerings, 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~~litigation, such as the securities litigation against Tableau and Slack that were brought before we ~~are the subject of~~acquired such companies. Such litigation, itwhether against Salesforce or an acquired subsidiary, 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,~~resources and ~~thereby materially and adversely affect the market price of our common stock and the trading price of the notes.~~

~~We are not restricted~~liability resulting 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 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~~settlement of ~~a fundamental change.~~

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

There can be no assurance that we will have sufficient financial resources, or will be able to arrange financing, to pay the fundamental change purchase price if holders submit their notes for purchase by us upon the occurrence of a fundamental change or to pay the amount of cash due if holders surrender their notes for conversion. In addition, agreements governing any future debt may restrict our ability to make each of the required cash payments even if we have sufficient funds to make them. Furthermore, our ability to purchase the notes or to pay cash upon the conversion of the notes may be limited by law or regulatory authority. If we fail to purchase the notes, to pay interest due on the notes, 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 conversionlitigation 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 of the notes 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 respectmaterial adverse impacts to our ~~common stock upon conversion~~operating cash flows or results 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 haveoperations for 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 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.given period.

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

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

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

~~provide that directors may only be removed with the approval of holders of 66 2/3 percent of our outstanding capital stock;~~

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

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

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

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

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

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

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

General Risks

The effects of the COVID-19 pandemic and related public health measures have materially affected how we and our customers are operating our businesses, and have in the past materially affected our operating results and cash flows; the duration and extent to which this will impact our future results of operations and cash flows remain uncertain.

The COVID-19 pandemic and related public health measures have materially affected how we and our customers are operating our businesses, and have in the past materially affected our operating results and cash flows; the duration and extent to which this will impact our future results remain uncertain. In response to the COVID-19 pandemic, we cancelled or delayed some customer events, and shifted many of them to virtual-only experiences. We may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee and industry events in the future. If we attempt to reintroduce large in-person events, such as our annual Dreamforce conference, we may not be able to do so successfully and our customers may not be able or willing to attend them.

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

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

Our operations have been negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control, and COVID-19 cases (including the spread of variants or mutant strains) continue to surge in certain parts of the world, which could impact the operations of our business infrastructure and service providers in such parts of the

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world and delay our business processes, product development and foreign investments. Authorities throughout the world have implemented numerous preventative measures to contain or mitigate further spread of the virus, such as travel bans and restrictions, limitations on business activity, quarantines, work-from-home directives and shelter-in-place orders. These public health measures have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas, both regionally and worldwide, which have impacted our business and results of operations and cash flows. As we continue to monitor the situation and public health guidance throughout the world, we may adjust our current policies and practices, and existing and new precautionary measures could negatively affect our operations.

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

Volatile and significantly weakened global economic conditions have in the past and may in the future adversely affect our industry, business and results of ~~their notes upon the occurrence of a fundamental change,~~operations.

Our overall performance depends in part on worldwide economic and ~~the provisions requiring an increase to the conversion rate for conversions~~geopolitical conditions. The United States and other key international economies have experienced significant economic and market downturns in connection with the COVID-19 pandemic, and are likely to experience additional cyclical downturns from time to time in which economic activity is impacted by falling demand for a ~~make-whole fundamental~~variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. These economic conditions can arise suddenly, as did the conditions associated with the COVID-19 pandemic, and the full impact of such conditions can be difficult to predict. In addition, geopolitical and domestic political developments, such as existing and potential trade wars and other events beyond our control, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets, as has been the case with the COVID-19 pandemic and relations between the United States and China. Moreover, these conditions have affected and may continue to affect the rate of IT spending; could adversely affect our customers’ ability or willingness to attend our events or to purchase our enterprise cloud computing services; have delayed and may delay customer purchasing decisions; have reduced and may in the future reduce the value and duration of customer subscription contracts; and we expect these conditions will adversely affect our customer attrition rates. All of these risks and conditions could materially adversely affect our future sales and operating results.

Natural disasters and other events beyond our control have in the past and may in the future materially adversely affect us.

Natural disasters or other catastrophic events have in the past and may in the future cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shutoffs or shortages, actual or threatened public health emergencies (including the ongoing COVID-19 pandemic) and other events beyond our control. For example, in response to the

COVID-19 pandemic we temporarily closed our offices globally, including our corporate headquarters, and are experiencing and expect to continue to experience ongoing effects related to the local and global economic and other effects of this pandemic. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers, and could decrease demand for our services. Our corporate headquarters, and a significant portion of our personnel, research and development activities, IT systems and other critical business operations, are located near major seismic faults in the San Francisco Bay Area. Because we do not carry earthquake insurance for direct earthquake-related losses, with the exception of the building that we own in San Francisco, and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected in the event of a major earthquake or catastrophic event, and the adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event. For example, wildfires have resulted in power shut-offs in the San Francisco Bay Area and are likely to occur in the future, and this could adversely affect the work-from-home operations of our employees in the San Francisco Bay Area.

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Climate change may ~~in certain circumstances delay or prevent~~have an impact on our business.

While we seek to mitigate our business risks associated with climate change by establishing robust environmental programs and partnering with organizations who are also focused on mitigating their own climate-related risks, we recognize that there are inherent climate-related risks wherever business is conducted. Any of our primary locations may be vulnerable to the adverse effects of climate change. For example, our California headquarters have historically experienced, and are projected to continue to experience, climate-related events at an increasing frequency, including drought, water scarcity, heat waves, wildfires and resultant air quality impacts and power shutoffs associated with wildfire prevention. Furthermore, it is more

difficult to mitigate the impact of these events on our employees while they work from home as a ~~takeover~~result of usthe COVID-19

pandemic. Changing market dynamics, global policy developments and the ~~removal~~increasing frequency and impact of ~~incumbent management that might otherwise be beneficial~~extreme weather events on critical infrastructure in the U.S. and elsewhere have the potential to ~~investors.~~disrupt our business, the business of our third-party suppliers and the business of our customers, and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations.

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

In connection with the acquisition of MetaMind, Inc. in April 2016, the Company issued 1,580 shares of Company common stock on October 2, 2017. This issuance was made in reliance on one or more of the following exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”): Section 4(a)(2) of the Securities Act, Regulation D promulgated under the Securities Act, and Regulation S promulgated under the Securities Act.Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


~~ITEM 4.~~	~~MINE SAFETY DISCLOSURES~~

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


~~ITEM 5.~~	~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

Not applicable.


~~ITEM 6.~~	~~EXHIBITS~~

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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Index to Exhibits

Exhibit
No.

Provided
Herewith

Incorporated by Reference

Exhibit Description

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

6/7/2019

3.2

Amended and Restated Bylaws of salesforce.com, inc.

8-K

001-32224

3.1

3/12/2021

4.1

Second Supplemental Indenture, dated July 12, 2021, between salesforce.com, inc. and U.S. Bank National Association, as trustee (including Forms of the 2024, 2031, 2041, 2051, 2061 and Sustainability Notes)

8-K

001-32224

4.2

7/12/2021

4.2

Second Supplemental Indenture, dated July 21, 2021, among Slack Technologies, Inc., s alesforce.com, i nc., Skyline Strategies II LLC and U.S. Bank National Association, as trustee

8-K

001-32224

4.3

7/21/2021

10.1*

salesforce.com, inc. Amended and Restated 2013 Equity Incentive Plan

8-K

001-32224

10.1

6/14/2021

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

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

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

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Extension Definition

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

The Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101).

* Indicates a management contract or compensatory plan or arrangement.

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
06/03/2016

3.2
Amended and Restated Bylaws of salesforce.com, inc.
8-K 001-32224 3.2
03/21/2016

10.1
Form of Sub-Reseller Agreement to Reseller Agreement 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 Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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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: August 27, 2021

~~Dated: November 22, 2017~~

salesforce.com, inc.

~~salesforce.com, inc.~~

By:

~~By:~~

/S~~/ MARK~~ ~~J. HAWKINS~~ s/ AMY WEAVER

~~Mark J. Hawkins~~Amy Weaver

President and

Chief Financial Officer

(Principal Financial Officer)

Dated: August 27, 2021

salesforce.com, inc.

By:

/s/ JOE ALLANSON

Joe Allanson

~~Dated: November 22, 2017~~

~~salesforce.com, inc.~~

~~By:~~

/S~~/ J~~OE A~~LLANSON~~

~~Joe Allanson~~

Executive Vice President,

Chief Accounting Officer

and Corporate Controller

(Principal Accounting Officer)



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


Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CRM	New York Stock Exchange


Large accelerated filer			☒	Accelerated filer	☐

Non-accelerated filer			☐	Smaller reporting company	☐


~~Large accelerated filer~~ x	~~Accelerated filer~~	¨

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

	Emerging growth company	¨☐


					Page No.
			PART I. FINANCIAL INFORMATION

Item 1.			Financial Statements:

				~~Page No.~~
	~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements:~~

	Condensed Consolidated Balance Sheets as of ~~October~~July 31, ~~2017~~2021 and January 31, ~~2017~~2021	3

			Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~October~~July 31, ~~2017~~2021 and ~~2016~~2020		4

			Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and ~~nine~~six months ended ~~October~~July 31, ~~2017~~2021 and ~~2016~~2020		5

			Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended July 31, 2021 and 2020		6

			Condensed Consolidated Statements of Cash Flows for the three and ~~nine~~six months ended ~~October~~July 31, ~~2017~~2021 and ~~2016~~2020		67

			Notes to Condensed Consolidated Financial Statements		89

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3433

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		5049

Item 4.			Controls and Procedures		5352

			PART II. OTHER INFORMATION

Item 1.			Legal Proceedings		5453

Item 1A.			Risk Factors		5553

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		7176

Item 3.			Defaults Upon Senior Securities		7176

Item 4.			Mine Safety Disclosures		7176

Item 5.			Other Information		7176

Item 6.			Exhibits		7176


	July 31, 2021		January 31, 2021

Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	6,299	$	6,195
Marketable securities	3,351		5,771
Accounts receivable, net	4,074		7,786
Costs capitalized to obtain revenue contracts, net	1,211		1,146
Prepaid expenses and other current assets	1,321		991
Total current assets	16,256		21,889
Property and equipment, net	2,711		2,459
Operating lease right-of-use assets, net	3,123		3,204
Noncurrent costs capitalized to obtain revenue contracts, net	1,820		1,715

Strategic investments	4,105		3,909
Goodwill	48,103		26,318
Intangible assets acquired through business combinations, net	9,746		4,114
Deferred tax assets and other assets, net	2,794		2,693
Total assets	$	88,658	$	66,301
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	4,274	$	4,355
Operating lease liabilities, current	713		766
Unearned revenue	11,067		12,607
Slack Convertible Notes	1,339		0

Total current liabilities	17,393		17,728
Noncurrent debt	10,589		2,673
Noncurrent operating lease liabilities	2,878		2,842
Other noncurrent liabilities	2,278		1,565
Total liabilities	33,138		24,808

Stockholders’ equity:


Common stock	1		1
Additional paid-in capital	48,666		35,601
Accumulated other comprehensive loss	(84)		(42)
Retained earnings	6,937		5,933
Total stockholders’ equity	55,520		41,493
Total liabilities and stockholders’ equity	$	88,658	$	66,301



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



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



	October 31, 2017			January 31, 2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,071,837		$	1,606,549
Marketable securities	1,556,828			602,338
Accounts receivable, net	1,519,916			3,196,643
Deferred commissions	327,643			311,770
Prepaid expenses and other current assets	469,946			279,527
Total current assets	5,946,170			5,996,827
Property and equipment, net	1,864,891			1,787,534
Deferred commissions, noncurrent	253,004			227,849
Capitalized software, net	140,768			141,671
Strategic investments	670,406			566,953
Goodwill	7,294,141			7,263,846
Intangible assets acquired through business combinations, net	895,768			1,113,374
Other assets, net	424,888			486,869
Total assets	$	17,490,036		$	17,584,923
Liabilities, temporary equity and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	1,686,408		$	1,752,664
Deferred revenue	4,392,082			5,542,802
Convertible 0.25% senior notes, net	1,137,954			0
Total current liabilities	7,216,444			7,295,466
Convertible 0.25% senior notes, net	0			1,116,360
Term loan	498,084			497,221
Loan assumed on 50 Fremont	198,471			198,268
Revolving credit facility	0			196,542
Other noncurrent liabilities	736,870			780,939
Total liabilities	8,649,869			10,084,796
Temporary equity:
Convertible 0.25% senior notes (See Note 8)	10,797			0
Stockholders’ equity:
Common stock	722			708
Additional paid-in capital	9,230,081			8,040,170
Accumulated other comprehensive income (loss)	3,554			(75,841		)
Accumulated deficit	(404,987		)	(464,910		)
Total stockholders’ equity	8,829,370			7,500,127
Total liabilities, temporary equity and stockholders’ equity	$	17,490,036		$	17,584,923



	Three Months Ended October 31,						Nine Months Ended October 31,
	2017			2016			2017			2016
Revenues:
Subscription and support	$	2,486,131		$	1,983,981		$	7,055,538		$	5,645,554
Professional services and other	193,710			160,794			573,471			452,442
Total revenues	2,679,841			2,144,775			7,629,009			6,097,996
Cost of revenues (1)(2):
Subscription and support	528,182			426,487			1,484,982			1,154,044
Professional services and other	186,326			159,035			550,748			454,038
Total cost of revenues	714,508			585,522			2,035,730			1,608,082
Gross profit	1,965,333			1,559,253			5,593,279			4,489,914
Operating expenses (1)(2):
Research and development	393,998			311,459			1,156,526			863,935
Marketing and sales	1,184,733			997,993			3,464,986			2,828,784
General and administrative	270,614			246,765			813,868			709,622
Total operating expenses	1,849,345			1,556,217			5,435,380			4,402,341
Income from operations	115,988			3,036			157,899			87,573
Investment income	10,049			3,709			24,069			23,747
Interest expense	(21,557		)	(21,946		)	(65,382		)	(64,665		)
Other income (expense) (1)	1,921			1,782			(2,695		)	(11,500		)
Gains from acquisitions of strategic investments	0			833			0			13,697
Income (loss) before benefit from (provision for) income taxes	106,401			(12,586		)	113,891			48,852
Benefit from (provision for) income taxes	(55,007		)	(24,723		)	(53,968		)	182,220
Net income (loss)	$	51,394		$	(37,309	)	$	59,923		$	231,072
Basic net income (loss) per share	$	0.07		$	(0.05	)	$	0.08		$	0.34
Diluted net income (loss) per share	$	0.07		$	(0.05	)	$	0.08		$	0.33
Shares used in computing basic net income (loss) per share	717,445			690,468			711,884			683,075
Shares used in computing diluted net income (loss) per share	738,106			690,468			730,212			696,257






















	Three and Six months ended July 31, 2021
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at January 31, 2021	919	$	1	$	35,601	$	(42)	$	5,933	$	41,493
Common stock issued	6	0		67		0		0		67
Stock-based expense	0	0		564		0		0		564
Other comprehensive loss, net of tax	0	0		0		(26)		0		(26)
Net income	0	0		0		0		469		469
Balance at April 30, 2021	925	1		36,232		(68)		6,402		42,567
Common stock issued	5	0		525		0		0		525
Shares issued related to the acquisition of Slack	46	0		11,269		0		0		11,269
Stock-based expense	2	0		640		0		0		640
Other comprehensive loss, net of tax	0	0		0		(16)		0		(16)
Net income	0	0		0		0		535		535
Balance at July 31, 2021	978	$	1	$	48,666	$	(84)	$	6,937	$	55,520

	Three and Six months ended July 31, 2020
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at January 31, 2020	893	$	1	$	32,116	$	(93)	$	1,861	$	33,885
Common stock issued	6	0		119		0		0		119
Stock-based expense	0	0		504		0		0		504
Other comprehensive loss, net of tax	0	0		0		(42)		0		(42)
Net income	0	0		0		0		99		99
Balance at April 30, 2020	899	1		32,739		(135)		1,960		34,565
Common stock issued	9	0		605		0		0		605
Stock-based expense	0	0		578		0		0		578
Other comprehensive income, net of tax	0	0		0		67		0		67
Net income	0	0		0		0		2,625		2,625
Balance at July 31, 2020	908	$	1	$	33,922	$	(68)	$	4,585	$	38,440



Computers, equipment and software		3 to 9 years
Furniture and fixtures		5 years
Leasehold improvements		Shorter of the estimated lease term or 10 years
~~Building and structural components~~		~~Average weighted useful life of 32 years~~
~~Building - leased facility~~		~~27 years~~
~~Building~~Buildings and building improvements	10 to 40 years


	Current		Noncurrent		Total
As of July 31, 2021 (1)	$	18.7	$	17.5	$	36.2

As of January 31, 2021	$	18.0	$	18.1	$	36.1


Investments Classified as Marketable Securities	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Corporate notes and obligations	$	2,159	$	11	$	(4)	$	2,166
U.S. treasury securities	81		0		0		81
Mortgage-backed obligations	223		3		0		226
Asset-backed securities	645		3		0		648
Municipal securities	70		1		0		71

Commercial paper	5		0		0		5

Covered bonds	139		0		(1)		138
Other	16		0		0		16
Total marketable securities	$	3,338	$	18	$	(5)	$	3,351



	As of
	October 31, 2017		January 31, 2017
Due within 1 year	$	226,929	$	104,631
Due in 1 year through 5 years	1,314,352		494,127
Due in 5 years through 10 years	15,547		3,580
	$	1,556,828	$	602,338



	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	$	424,101	$	(2,052	)	$	28,653	$	(383	)	$	452,754	$	(2,435	)
U.S. treasury securities	114,724		(491		)	0		0			114,724		(491		)
Mortgage backed obligations	68,841		(315		)	16,564		(217		)	85,405		(532		)
Asset backed securities	126,186		(210		)	3,461		(9		)	129,647		(219		)
Municipal securities	30,671		(148		)	2,788		(53		)	33,459		(201		)
Foreign government obligations	62,697		(520		)	1,027		(4		)	63,724		(524		)
U.S. agency obligations	6,746		(9		)	0		0			6,746		(9		)
Covered bonds	5,861		(61		)	0		0			5,861		(61		)
	$	839,827	$	(3,806	)	$	52,493	$	(666	)	$	892,320	$	(4,472	)


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Sales	$	1,477	$	1,279	$	2,865	$	2,524
Service	1,600		1,303		3,106		2,555
Platform and Other	1,882		1,512		3,629		2,876
Marketing and Commerce	955		746		1,850		1,460
	$	5,914	$	4,840	$	11,450	$	9,415


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Americas	$	4,312	$	3,596	$	8,406	$	6,966
Europe	1,416		1,070		2,718		2,104
Asia Pacific	612		485		1,179		946
	$	6,340	$	5,151	$	12,303	$	10,016


	Measurement Category
	Fair Value		Measurement Alternative		Other		Total
Equity securities (1)	$	1,011	$	2,895	$	124	$	4,030
Debt securities and other investments	0		0		75		75
Balance as of July 31, 2021	$	1,011	$	2,895	$	199	$	4,105



	As of
	October 31, 2017		January 31, 2017
Notional amount of foreign currency derivative contracts	$	1,275,276	$	1,280,953
Fair value of foreign currency derivative contracts	$	853	$	10,205



		As of
	Balance Sheet Location	October 31, 2017		January 31, 2017
Derivative Assets
Foreign currency derivative contracts	Prepaid expenses and other current assets	$	4,225	$	13,238
Derivative Liabilities
Foreign currency derivative contracts	Accounts payable, accrued expenses and other liabilities	$	3,372	$	3,033



	Three Months Ended October 31,						Nine Months Ended October 31,
	2017			2016			2017		2016
Foreign currency derivative contracts	$	(1,606	)	$	(39,624	)	$	11,500	$	(86,528	)


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of July 31, 2021
Cash equivalents (1):
Time deposits	$	0	$	1,076	$	0	$	1,076
Money market mutual funds	2,396		0		0		2,396
Cash equivalent securities	0		11		0		11
Marketable securities:
Corporate notes and obligations	0		2,166		0		2,166
U.S. treasury securities	0		81		0		81
Mortgage-backed obligations	0		226		0		226
Asset-backed securities	0		648		0		648
Municipal securities	0		71		0		71

Commercial paper	0		5		0		5

Covered bonds	0		138		0		138
Other	0		16		0		16
Strategic investments:
Publicly held equity securities	1,011		0		0		1,011


Total assets	$	3,407	$	4,438	$	0	$	7,845


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of January 31, 2021
Cash equivalents (1):
Time deposits	$	0	$	1,143	$	0	$	1,143
Money market mutual funds	377		0		0		377
Cash equivalent securities	0		1,910		0		1,910
Marketable securities:
Corporate notes and obligations	0		3,341		0		3,341
U.S. treasury securities	0		206		0		206
Mortgage-backed obligations	0		387		0		387
Asset-backed securities	0		1,101		0		1,101
Municipal securities	0		244		0		244


Covered bonds	0		328		0		328
Other	0		164		0		164
Strategic investments:
Publicly held equity securities	2,068		0		0		2,068


Total assets	$	2,445	$	8,824	$	0	$	11,269


	Operating Leases		Finance Leases
Fiscal Period:
Remaining six months of fiscal 2022	$	378	$	36
Fiscal 2023	748		74
Fiscal 2024	575		74
Fiscal 2025	458		65
Fiscal 2026	394		11
Thereafter	1,330		0
Total minimum lease payments	3,883		260
Less: Imputed interest	(292)		(8)
Total	$	3,591	$	252



Fiscal Period:
Remaining three months of Fiscal 2018	$	69,053
Fiscal 2019	266,233
Fiscal 2020	225,039
Fiscal 2021	169,481
Fiscal 2022	111,353
Thereafter	54,609
Total amortization expense	$	895,768



Balance as of January 31, 2017	$	7,263,846
Sequence, Inc. acquisition	22,982
Adjustments of acquisition date fair values, including the effect of foreign currency translation	7,313
Balance as of October 31, 2017	$	7,294,141



	Par Value Outstanding		Equity Component Recorded at Issuance			Liability Component of Par Value as of
(in thousands)	Par Value Outstanding		Equity Component Recorded at Issuance			October 31, 2017		January 31, 2017
0.25% Convertible Senior Notes due April 1, 2018	$	1,149,979	$	122,421	(1)	$	1,137,954	$	1,116,360



	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



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



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



	Three Months Ended October 31,						Nine Months Ended October 31,
Stock Options	2017			2016			2017			2016
Volatility	30.8		%	32.3		%	30.8 - 31.4		%	32.1 - 32.3		%
Estimated life	3.5 years			3.5 years			3.5 years			3.5 years
Risk-free interest rate	1.6 - 1.8		%	0.9 - 1.1		%	1.4 - 1.8		%	0.9 - 1.1		%
Weighted-average fair value per share of grants	$	24.12		$	18.75		$	22.26		$	18.75


	Options Outstanding
	Outstanding Stock Options (in millions)	Weighted- Average Exercise Price		Aggregate Intrinsic Value (in millions)
Balance as of January 31, 2021	23	$	120.61




Options granted under all plans	7	196.68



Exercised	(3)	93.38

Plan shares expired or canceled	(1)	154.24
Balance as of July 31, 2021	26	$	143.29	$	2,586
Vested or expected to vest	24	$	139.92	$	2,472
Exercisable as of July 31, 2021	11	$	99.98	$	1,599



			Options Outstanding
	Shares Available for Grant		Outstanding Stock Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2017	16,531,822		30,353,076		$	59.88
Increase in shares authorized:
2013 Equity Incentive Plan	37,009,109		0		0.00
2014 Inducement Plan	16,198		0		0.00
Options granted under all plans	(1,020,046	)	1,020,046		89.01
Restricted stock activity	(2,696,029	)	0		0.00
Stock grants to board and advisory board members	(163,596	)	0		0.00
Exercised	0		(6,705,729	)	43.57
Plan shares expired	(44,309	)	0		0.00
Canceled	1,314,229		(1,314,229	)	71.92
Balance as of October 31, 2017	50,947,378		23,353,164		$	65.16	$	868,266
Vested or expected to vest			21,891,255		$	64.58	$	826,607
Exercisable as of October 31, 2017			10,090,058		$	57.62	$	451,210


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding (in millions)	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Shares (in millions)	Weighted- Average Exercise Price
$0.71 to $59.34	4	3.4	$	38.55	3	$	37.85
$59.64 to $118.04	5	2.9	96.87		4	94.62
$122.03 to $148.95	2	5.4	139.85		1	136.97
$154.14	5	5.6	154.14		1	154.14
$155.20 to $207.53	4	4.6	161.24		2	161.28
$215.17 to $258.04	6	6.6	220.16		0	0.00
	26	4.9	$	143.29	11	$	99.98


	Restricted Stock Outstanding
	Outstanding (in millions)	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value (in millions)
Balance as of January 31, 2021	25	$	155.50
Granted - restricted stock units and awards	16	228.60
Granted - performance-based stock units	1	196.24
Canceled	(2)	164.98
Vested and converted to shares	(7)	147.56
Balance as of July 31, 2021	33	$	192.68	$	7,932
Expected to vest	29			$	6,899



	Restricted Stock Outstanding
	Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2017	27,453,498		$	0.001
Granted - restricted stock units and awards	2,844,391		0.001
Canceled	(1,606,148	)	0.001
Vested and converted to shares	(6,105,427	)	0.001
Balance as of October 31, 2017	22,586,314		$	0.001	$	2,311,483
Expected to vest	19,722,393				$	2,018,390



~~Options outstanding~~Fiscal Period:		~~23,353,164~~
~~Restricted stock awards and units and performance stock units outstanding~~Remaining six months of fiscal 2022		~~22,586,314~~$	1,621
~~Stock available for future grant:~~Fiscal 2023		2,465
~~2013 Equity Incentive Plan~~Fiscal 2024		~~50,316,168~~1,609
~~2014 Inducement Plan~~Fiscal 2025		~~520,478~~896
~~Amended and Restated 2004 Employee Stock Purchase Plan~~Thereafter		~~9,629,807~~115
~~Acquired equity plans~~		~~110,732~~
~~Convertible Senior Notes~~Total stock-based expense		~~17,308,564~~$
~~Warrants~~6,706	~~17,308,880~~
	~~141,134,107~~