---

---

ITEM 1.	FINANCIAL STATEMENTS

---

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

---

*	Accounting Standards Update 2016-01 “Financial Instruments” (ASU 2016-01)

---

---

---

•	the standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations;

•	the estimate of variable consideration as part of the adoption of ASU 2014-09;

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

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

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

•	the fair value of certain stock awards issued;

•	the useful lives of intangible assets; and

•	the valuation of strategic investments.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

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

•	cross sell and upsell;

•	extend existing service offerings;

•	reduce customer attrition;

•	expand and strengthen the partner ecosystem;

•	expand internationally;

•	target vertical industries;

•	expand into new horizontal markets;

•	extend go-to-market capabilities;

•	ensure strong customer adoption; and

---

•	encourage the development of third-party applications on our cloud computing platform.

---

---

---

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

---

---

•	the SSP of performance obligations for contracts with multiple performance obligations;

•	the estimate of variable consideration as part of the adoption of ASU 2014-09;

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

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

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

•	the fair value of certain stock awards issued;

•	the useful lives of intangible assets; and

•	the valuation of strategic investments.

---

---

---

---

---

---

---

---

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

---

---

---

ITEM 4.	CONTROLS AND PROCEDURES

---

ITEM 1.	LEGAL PROCEEDINGS

ITEM 1A.	RISK FACTORS

---

---

---

•	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;

•	challenges converting the acquired company's revenue recognition policy from service accounting to revenue based on the transfer of control and appropriate allocation of the customer consideration to the individual deliverables;

•	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 unearned revenue and unbilled unearned 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 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.

---

•	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, and only charge a premium for advanced features and functionality;

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

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

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

•	Integration software vendors, integration service providers and API management providers;

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

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

•	Artificial intelligence solutions from new startups and established companies.

---

•	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 unearned revenue and remaining transaction price, 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, all of which may impact implied growth rates;

•	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, including the impact of changes in U.S. federal and state and international tax laws applicable to corporate multinationals;

•	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;

•	changes in the fair value of our strategic investments in early-to-late stage public and privately held companies, which could be material in a particular quarter;

•	equity issuances, including as consideration in acquisitions;

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

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

•	regulatory compliance costs; and

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

•	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, 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 could result in decreased values of these balances or potential difficulties protecting our foreign assets or satisfying local obligations;

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

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

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

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

•	different pricing environments;

•	difficulties in staffing and managing foreign operations;

•	different or lesser protection of our intellectual property;

•	longer accounts receivable payment cycles and other collection difficulties;

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

•	regional economic and political conditions.

---

---

---

---

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

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

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

•

due to limitations within the revolving credit facility and 2019 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.

---

---

•	variations in our operating results, earnings per share, cash flows from operating activities, unearned revenue, remaining transaction price, 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, unearned revenue, remaining transaction price and earnings per share;

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

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

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

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

•	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, 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; and

•	issuance of debt or other convertible securities.

---

•	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 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.

ITEM 4.	MINE SAFETY DISCLOSURES

ITEM 5.	OTHER INFORMATION

ITEM 6.	EXHIBITS

---

---

---