Salesforce Inc.: 10-K Risk Factor Changes

Our quarterly results are likely to fluctuate. Fluctuations have occurred due to known and unknown risks, such as the global economic impact of ongoing conflicts, including the war in Ukraine and the Israel-Hamas war, and rising interest rates. In addition, our fiscal fourth quarter has historically been our strongest quarter for new business and renewals, and the year-over-year compounding effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of invoices that we generate in the fourth quarter to continually increase in proportion to our billings in the other three quarters of our fiscal year. As a result, our fiscal first quarter has typically in the past been our largest collections and operating cash flow quarter.

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 war in Ukraine and the Israel-Hamas war, financial market conditions, increasing costs of operation and foreign currency exchange rates, any of which can adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay prospective customers’ purchasing decisions, reduce the value of new subscription contracts, or affect attrition rates;
• our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;
• the attrition rates for our services;
• the size and productivity of our sales force;
• the length of the sales cycle for our services;
• new product and service introductions by our competitors;
• our success in selling our services to large enterprises;
• changes in unearned revenue and remaining performance obligation, due to seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term, the collectability of invoices related to multi-year agreements, the timing of license software revenue recognition, or fluctuations due to foreign currency movements, all of which may impact implied growth rates;
• our ability to realize benefits from strategic partnerships, acquisitions or investments;
• our ability to execute and realize benefits from the Restructuring Plan and other workforce reductions, or any similar actions taken in the future;
• variations in the revenue mix of our services and growth rates of our subscription and support offerings, including the timing of software license sales and sales offerings that include an on-premise software element for which the revenue allocated to that deliverable is recognized upfront;
• the seasonality of our sales cycle, including software license sales, and timing of contract execution and the corresponding impact on revenue recognized at a point in time;
• changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition, customer preference or other factors;
• 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;
• 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, including the cost to recruit and train such 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;
• the cost, timing and management effort required for the introduction of new features to our services;
• the costs associated with acquiring new businesses and technologies and the follow-on costs of integration and consolidating the results of acquired businesses;
• expenses related to our real estate or changes in the nature or extent of our use of existing real estate, including our office leases and our data center capacity and expansion;
• timing of additional investments in our enterprise cloud computing application and platform services and in our consulting services;
• expenses related to significant, unusual or discrete events, which are recorded in the period in which the events occur, including 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, which have impacted and may continue to impact the value and liquidity of our investment portfolio;
• changes in the fair value of our strategic investments in early-to-late-stage privately held and public companies, including impairments, which could negatively and materially impact our financial results, particularly in periods of significant market fluctuations;
• equity or debt issuances, including as consideration in or in conjunction with acquisitions;
• the timing of stock awards to employees and the related adverse financial statement impact of having to expense those stock awards on a straight-line basis over their vesting schedules;
• evolving regulations of cloud computing and cross-border data transfer restrictions and similar regulations;
• regulatory compliance and acquisition costs; and
• the impact of new accounting pronouncements and associated system implementations.

Many of these factors are outside of our control, and the occurrence of one or more of them might cause our operating results to vary widely. If we fail to meet or exceed operating results expectations or if securities analysts and investors have estimates and forecasts of our future performance that are unrealistic or that we do not meet, the market price of our common stock could decline. In addition, if one or more of the securities analysts who cover us adversely change their recommendations regarding our stock, the market price of our common stock could decline.