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Robert S . Green (State .Ba.t• No . 136183)GREEN WELLING LIT235 Pine Street, 15th ."lo r-San .FrafctSco , CA 94104"t"elephone: (415) 477--67()0

(415)477-67101:' ail: sg(c classcoLIns Lci. rr ~

l:.jaisotn Counsel for .plaintiffs

David ester (ddkess let,@ sbc lass I aw .com)Andrew L. /jvit.z (Admitted Pro fla.c Vice ) (azivitz ( sbciassia.w.c:or )Ti•evan 1:3or m (Admitted .Pro 11w. Vice) (tl orum@sbclassIaw .c (.)m)4Cii :1 FF'R1N & BARROWAY, LIP280 Kin of f russia RoadRadnor, PA 19087Telephone '- (6 .10) 667-77061"acsimile : (610) 667-7056

Lead Counsel for Plaintiffs

UNITED STATES .DISTRICT COURT

i ■ 1.. Iyr1.rF 1E ilt.y I)iST I.CT OF CALIR.)R.N .I A

I

EN :RE SAl . f S1'ORC:E, .CX M. SEC1 .JR .ITIESLITIGATION

1 ' ]'his Document d al, s J'() :

! .A . ..A . ACTIONS

Master File No . C-04-3009 (J W )

PLAINTIFFS' .R.EQU1 .ESTT' F(:)RJUIH(AA:L NOT :T" :1 :CE IN SUPPORTOF PLAIN TIFF`. S' OPPPOSI.'I'I(.).N ToDF FI NDAN TS' MOTION ' . 'ODISMISS

Date : August 26, 2005Time: 9 :(}0 a.imDept .: Courtroom 2,17"' FloorBefore : Honorable Jeffrey S . White

I:'C.., .IN IFil' ;' Rl3QlJES [' "t. IZ Ju.)i?IrIAI .. No' :[ i( ::' E .I :S(:) X,:f...AIN'F FFS' CDPP' 'co l*1 .,S iv' T)

c "<asc No . C.. ..04- 009- :ISW

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Lead I'Eailitiff' (1) uo Zhu, on I. ehalf of a larger class of I)Iairatiffs (collectively "Plaintiff's"),

hereby respvcttully requests that the [ .'c urt take judicial notice of each of the following documents

pLtr'suant to .Federal Rule: of Evidence 201 ("RUIc 20 1

EXIIIIIHILS

A tide 'r: .I Ee as °s :NNows

A- "Creme de la CRM," The Economist, June 19, 20( .)4 . A true and correct copy of this

document is attached as Exhibit A .

13 . "Salesforce Leaps Out of the Starting Ciat .e : JUMps 56%l:, cart .First tby," National Post .

June 24, 20()4, written by Wei (iii . A true and co. n-ect copy of this document is attached

as Exhibit B .

C. "No Summer Slump for Tech L POs," C'N,NIV o.:mey, June 23, 2004. A true and correct copy

of this document is attached as Exhibit C .

D. "C'FO Lowers Profit Estimates as Salesf ( : 3'c(; .coin Parties," hifr,nna.tion Week:, July 26,

2004, written by P0111 McDougal] . A true and correct copy of this document is attached as

Ex h i bi t 1) .

1 "Salesforce .com .Files Registration Statement for Initial Public Offering," Press Release

by Sales force .com issued on December .18, 2003 . A true and correct copy of this

document. is attached as Exhibit E ,

.f=I . salesf()rce'S 1 ir,m 8-l tiled on February 17, 2005, with the S1. C . A true grid correct copy

of this document. is attached as 1: xl . .

0, Salest-orcc s .1:{'orm 8-K i'i led on November 17, 2004, with the SEC:"- A true, and correct

copy of this document is attached as I . xhibit C ; .

H . Salesforce's Form 8-K filed on August . 19, 2004, with the SEC . A true ::Tend COI-rect. Copy

of this document is attached as Exhibit H .

PLAINTIFF'S' t2I,Q(Jl 5't' FOR J[JE)IC,'LA,..., c.Yf'I(.'E 1St) 1 1 .f1IN"I'U . FS OPP. TO i)EF',S' MTD

Case No . c'-()4-3009-4SW

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D15CLJSSR)N

(:: encralIy, a district court, in ruling on R. (.. iv . P. 12(b)(6) motion, may not consider an y

t at'd,al beyond the. pleadings . Lee V . C :"ily of'Los Angeles, 250 F3 d 668, 688 (9th C'.jr'_ 201)1) (c it a tion

o mritted) . "het., Courts, a ndler' the inco .rpo,rat .ion rul ., can Consider the entirety ofa document not attached

to sa pleading when portions of it are referenced in or otherwise relied upon by a party in drafting the

pleading, Branch v. 'un.nel!, 14 F3d 449, 454 (9th C:ii . .1994) . In addition, the Court can consider

mattevs that ar : sub ec:t to judicial notice . Mack v. South Bay Beer I)ix!ributo,rs, 798 F.2d 1279, .1282

(9th Cir . .986) .

`;I he documents attached as Exhibits A-E are proper subject of judicial notice because a cour t

may cakejLidicial not .ic : of information in newspaper articles where, as here, the infarination in the

I articles is known Within the territorial .jurisdiction of the court and "would be capable of sufficientl y

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I accurate and ready determination ." Ritfei- v. f.Iughes Ain:.rc:rf Co., 58 FM 454, 458-459 (9th Cir . 199)5) ,

I See also Rivera c,. Philip Morris, Mc-, 395 F.3d 1.142, 1151 . (9th Cii. 2005) ('The Rder:tl Rules o f

Evidence allow f'orjudiciai notice o f a fact th at is 'not .subject to re asonab le dispute in that it is Cithet- (1. )

generally known Within the territorial jurisdiction of the 1 :.i:.ial court . or (2) capable of accurate and read y

f determination by resort to sources whose accuracy cannot reasonably be questioned'") ; Fed . R . fivid .

s 1 :-1 :1 because they are SEC filings, the201(b). Similarly, the Court may take judici l n attic of Exhibit ,

I contents of Which are not . subject to dispute . See In t'e .Nuko ,Crier . Sys, Sec_ Li1igalion , 199 F.R .D. 338 ,

34 .1. . (ND_ .'al 2000) ("the court may l (ke judicial notice o f public records outside the pleadings ,

including SEC filings") .

F"ut- herrriore, all of die .Exhibits may be considered by the Cou :rt. pursuant to by

I reference doctrine because the documents were either referenced in or otherwise relied upon by

'l ;:untit'I's in draf't.in the Comp lairtt .. See Ricrrt.c,h ► , . Tunnel, .1.4 N .3d 4149, 454 (9th Cir- 1994)-

I'.I .,AEEV1 IF ' 121 (1..1E ;S'l' f '(7.1t .J ..UDK.'IA j .. NOTICE ISO PLAINTIFFS' oii', 'N'[.) s' MIT)

(..' .isc No . C ..'-0 -3009".JSW

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Ik)r the foregoing r'asons, .Plahntiifs respectfully request that this Court take; judicial notic Of

each cif the d0CLI nent.s listed above .

D.. ate:d: June .13, 2005 RespcctfUlly submitted ,(. RF,I N WELLING, I..LP

Is! Robert S- GreenRobert ,S . Green (State Bat- No . .1.36183)235 Pine Steed., 15th .FloorSall Francisco, California 94104Telephone: (415) 477.670( :)Facsimile, (415) 477-t.71 0

Liaison Counselfor Plait))f

SCI I .IFFR1N HARROWAY, LITDavid KesslerAndrew ZivitzTrevan Borum

280 King of .FTUSs:ia RoadRadnor, PA 19087"t"elephone : (6 10) 667-7706Facsi«xi .le. (610) 667 -7056

Lead Counsel for Plaintiffs

FOR Jt .f{]IC'IAt., (:xrIC,, .E" [S(:) 1'.I ..AIN' I I .F1 Ss' (.)Yi' . `1'() 1);I.T S' MI'D

(.",ase, No . c-04.-3009-JS\

EXHIBIT

Copyright 2004 The l: cononmist Newspapers Ltd .

All Rights Reserve d'Fhc .Economist

June 19, 2004U .S . Edition

SEC] I BUSINESS

LENGTH . 1046 words

H.EA.DLINE Creme de la CIt.M ;

Sales fc rce .cor n

DATELINE: San Francisco

BODY

Google is not the only promising tech firm .foaling its shares this year

ITIE initial public offering (CPU), later this year, of shares in (3oogle, a popular internet search engine, has hoggedthe headlines, and the impressive discipline of Google's bosses in honouring the "quiet period" that securities regulatorsexpect before such a stockmarket listing has only added to the firm's mystique . The 111 (0 of Sal s ore .cans, a pioneer in

the $7 billion market for so-called custorner-relationship management (C .M) software, is a bit differont_ Marc Beniof,Salcs,forcc .c,om's boss, has hton frivolous about his quiet period . A famously gregarious entertainer and cocky marketer-he proposes TRM' for his ticker symbol, the equivalent of, say, Porsche asking for "CAW-Mr l3enic f finds it hard notto talk to jownalists . As a result, he has annoyed regulators into delaying his company's stockmarket debut, orginally

scheduled for May.

Yet Caoo ;le and Sates force, com, founded within a year of e ; R .ch other during the dotcorn boom of the late 1990s, arenot so dissimilar, The "vibe", as Californians like to say, is the same- At c:i ogle's headquarters in silicon Valley,employees rip around on Segway scooters and keep lava lamps in their cubicles . Salesforce .coni inhabits an officeabove a trendy eatery in San Prancisc ;u where rooms are named after Hawaiian islands, a prominent yoga . tQOCIICr coniesin on 'Tuesdays and Thursdays, and the most visible member of management is the "chief love of ficer" : Koa, M. r

Bonioffs goldwi retriever .

Although their audiences are different-the Sales departments of companies for Salesforce .cona, consumers all over

the world for Google-their technological visions are similar . Both have achieved success by finding new and simpleways for people to use their web browser . Google has done this by improving the way that people And information ;

Saleslorce: .corn by enabling the salespeople of companies to access and manage all their information on clients'accounts, and to market through a simple web page that intentionally looks a bit like Arnazorn's or el3ay's .

Mr BBoni<rll's vision (or transforming the CRM market in particular and business software in general has some orthe same potential that (ioogle's has for changing how people use the ioternet . Mr teniofs goal, he says with typical

hyperbole, is to put an "crud to software" . By this he means liberating Firms from current practice in the software

industry . Traditionally, firms pay for new software initially with largo licence fees, and then spend More money andtime trying to install t iv new applications on their computers and training employees to use the new features . Every sooften, when a software supplier upgrades, they have to start from scratch .

With SalesforCe,coto' .s service, by contrast, companies rent software rather than buy it-for $65 per user per mmmonth .

fl-they hire more people, they pay more . If they lay people: off, they pay less . They do not need to invest in new

The Economist June 19, 2004Page '2

hardware or technology staff, nor install software on existing computers, as all the computing takes place on

SaIesl;a r ce .corn's nra ckhines, Us rs (mostly salespeople) access the service through a web browser wherever they are .

The interfircc is familiar enough that training usually takes hours rather than weeks ,

The technical terra for a company such as Salestorce .c:orn is an application service provider (ASP) . That may make

anybody who remembers the boom and bust of the first generation of ASPS during the dotcorrn bubble sceptical, Those.

fbrerunners also prornised a software revolution by hosting the software applications of companies . But they failed

because they simply recreated each client's complex and unwieldy datacentre in their own basements, and Haverovercame the old problems of installation and integration with other software . With each new customer, the old ASPS

had, in eMct, to build another dataccntre ; there were few ccotiornies of scale ,

he second generation of ASPS is different. When Salesfarce .corrt signs up a new client, it simply creates an

account on the software: platform that ties together its farms of server-con1l)uters, In investor jargon, it the :re(ore has

hugs; operating leverage, the initial Start-up costs for hardware and software were high, but since break-even each new

cliennt's revenues have been almost pure profit . Salesforce .com made its first profit, of $3 .5nt, in the fiscal year that

ended in January, It has signed up 9,800 firms with 147,000 subscribers .

Although still small, Salesforce.com has already caused an upheaval in the CRM industry . Rival start-ups with

similar business models have emerged, such as kightNow Technologies, NetSuite and Sal sNet . The Cl{.lvl industry's

leaders, Siehel Systems and PeoplfSo'lt, have lost some niomenturn to Salesforce .corn and have belatedly started

offering their software as a service through the web . This leaves therm awkwardly praising their fledgling web offering,, ..;

while at the same tirne, preaching that the old model of selling software, their revenue mainstay, is still the best way t~]r

most Customers ,

They use two main argurrients against the Asps, First, software as a service is much harder to customise for the

special needs of big firrris . Second, it is harder to make it work with a firm's existing software applications, "Companies

want their CR.M to integrate with their billing system and everything else," says Gorge Ahn, the CR .M boss at

l'e*opleSoft.. Saleslorcc_coln's motto-"No Software"-is thus hot air, says Mr Ahn, because it takes lots of software and

fiddling to get it to link to the rest of a client's systems . "There is no magic pixic dust tlhat makes integration go away . "

Mr i3enioff shrugs (note to regulators : this was before the quiet period) . The evolutionary advance of the second

generation of ASk's over the first is precisely that customers can now custom ise their pages, as easily as consumers

arrange their Yahoo! or AOl., pages to their liking . And the task of integration too has been solved . In (act, argues Mr

BBenioff, clients can do themselves a favour by letting Salesforce .coni worry about hooking their various systems

together . InMasitngly, the vision says, all that users need to understand is how to navigate a web page, leaving them to

bet on with I*, That is the same ; for Salesforce,com as for Goole .

GRAPHI C : l3i:rtio€'f goes quietly

LOAD-DATE : June 18, 2004

EXHIBIT B

I of'l DOCUMENT

C:c,rpyriow 2004 Natioi iit .F' ost, All Rights kc;sei'ved

National l c strati I1]'1 a ncial Post & [ P Invest i ng ((, nad a )

.June 24, 2004 Thu sday National I:idition

iE4:(711[)t is Vinanc.ial P ost: lnvesti :ng, Pg . INl

[.. EN( .'I'H: 636 word s

lEADLENE So lAnTacci i leaps out of the starting gate : Jumps 56% on first day

SOU RC' : Reuter s

iYI., .I.NE : WLr (Ti t

.DA1'EUNi . : N I : Y(*K

BODY :NEW YORK . - Salosfo c.e- coinn fi le, bare urged 56%, in le debut on'Te public ma rkets yesterday, making it the top

Per-' a-nii 1g I1'}C.) this year, Iemi1lIwg t;th e heyday o 'f t.WWe 1990% Intern et boom .

ill lre Gal a cst~ ►°i:c {(..' ',) rose US $0. .( to close at .. S $ 7 ,2 . .tn ac tive t:rad .

It was the largest first-day gain o[ n initial public offering this year, and the best first-day gain 1 f an NYS :i-liM.I .I 10 sittcc, Mty, 20(11, according to 'fitc :~lrtsc>ri l'ittrincial, Intense investor interest in the company allowed it to price itsrat'.I'o i .ng ll)OVe an already boosted estimated price r'zt :rge ,

I. .n : E ramny of its failed brethren from the dot-corn boom, Sales#orc.e: has carved out a profitable niche of'providing Web-based software designed to help companies manage Customer reltttie .tis ,

"Pool. k are buying into the fl iture., " said Francis Jaskins, who tracks I['Os for [PC .7 desktop . "In the bubble, we

didn't have companies with this kind of-signific.and: revenue growth and margin,,, . "

The IP() follows on d w heels of MAW software company Wackboaid Inc, ., whose shares rose. 43% in its first

day ol-trading on t be public' mark is Nast week .

( : oogle s 1.15 $2 .7-billion !I'[ ::) is also u cling IN) c ze. this year, Salesti rce's success is also boosting prospects ofits smaller competitors, such as NetSuite and Mesnet .

Srtlesforce is one of the more controversia l il'[)s in re cent hir tory . '.Clle .II'(.) process was rrtarr'ed by it restatement vf'

past results and a forced cooling-ofT period after its chief ex ecutive hyped its business to media during a quiet penoci

manda ted by the Secui-it.ies and Exchange ( :'nrnmi ssii>rl .

`f he lengthened :I P(.) process and setbacks have not hurt its popularity, but May even have boosted it becau se of the

sw-ge of publicity, 511'id sonic analysts .

Oat 't'Iiesclaay morning, S leslcirce raised its target price to [..JS$9 to 1.15$10 from US$7.5 to [ .JS$ 8 .5 a share andshares ended lip pricing at 1, .1S$ I I on Tuesday nig;.art ,

That timl p ic'irig made SalesfOrce the 1 IT 1 11) in the 1.Jn :itcd St rtes this y . tt' to come in above the high end ol'the

initial (daffy fib. w, among 88 [leafs, according, to RAW Pet on . chie f market strategist oM'kC)1'p'1soi .I'lfkfii'cial .

I J5tion l Post`s Financial Post z. l{'1' Investing ((Canada) June 24,Page 2

jamic 1''1-EeCI'man7 an analyst O F"1.11crun'1 C.ilOball Partners, said be expect", the company to ea rn 12 cents a share in

fiscal 2005 and 29 c nts a share E .II fiscal 2006, He .is the only amlyst who fAlows the company, according to Thomsou

K v Call .

B ia sed 4,1F1 i is expected earnings for fiscal 2005, a stock price o US'$ 1 5 85 has put S alesfo ce at a price to earnings

ratio of 132 .

".It is a Very healthy v Iluaticnl, but I doia't think: its bobble valuation said Oris Selland, an analyst with Aberdeen

( .iroup .

The debut was delayed No month after its chief executive allowed a New York Times reporter to shad ow him 'I6r a

~iaty N x a long story, which may have violate d ; e.curitis s rules intended to keep companies from hyping their stocks

before their stock o .fter°ings ,

CAW.t executive Marc Beniol'f, calk 'Tuesday Said the company was still in this quiet period and dedhed cotxaa't ent . .in

,in email response to Reuters, Benk , who f }untied he company about five years ago, unloaded 2 Who shares at

1 .1418 a sharo days bef'ore it !:heel it an iPO .

In April, Saleslbrcc restated results for two past f seal years, to correct mistakes in the way the company recognized

sales colluussions ,

I:'iscaI 2004 was the first year the company was prof table. .For the year ended .fall . 3 I , the company earned US$3 .5

million- or 4 cents a share., all revenue of 1.1S$96 million .

For the fiscal .first quarter of 2004 ended April 30, the company earned US $437,000 oil revenue of' I.JS$34 .8,

million 1:31Et Sales .l'c rce would have posted a loss had it expensed its stock opt'iom . Results W o got a boo from

k:icnlicrlf';s extremely unusual annual salary o .l US` l last year ,

..,OA .P- DATE : .June 24 , 2004

EXHIBIT C

Ea PRINTTHISVLoney.Powered byrjOickabik

No summer slump for tech IPOsIestorce .com Is the latest tech offering to have a hot debut . Will Google be next?

:~EIr 2 3, 2O 4 : 4 : 11 PM ED T

8y F'}{11....8., ...., +9orj. . fa . CNN/Money sernIOr writer'

NEW YORK (CNN/Money) - Somebody forgot to tell technology IPO investors that thesummer doldrums are here .

.lesforce.c m ( C M : Research, Estimates), a Web-based customer-relationship softwarecompany, went public Wednesday morning and wound up closing about 56 percent higherthan its offering price .

This successful IPO comes on the heels of a couple other lucrative tech debut . On Friday,educational-software developer BIackboard (B _ .B . . .a rch, Ef~ji.matp;3) went public andsurged 43 percent .

Online jeweler BEue. .Nilg (Nj. R rcl , Est.m tq) has also been a gem, with shares upnearly 60 percent since their IPO last month . (For more on Blue Nile, read "Shine . n, . crazy-d i

of course, this is all just a prelude to the most anticipated IPO in years, the debut of Google,expected later this year .

Salesforce .com's first day pop was slightly better than with what some were hoping for --IPOfinanic i .com president David Menlow said he was expecting as much as a 50 percentgain.

No more triple digit pops. . .but that's OK

But even these heady gains fall well short of the rocket shots common in the late 1990s .

This is little more normalized environment," said Ben Holmes, managing member withProtege Funds, an investment firm that focuses on 1POs . "You're not going to see stockscoming out of the gate doubling and tripling anymore .,"

Still, Salesforce.com's gains were even more impressive considering that the company hadboosted its offering price twice in the past week . It originally planned to sell the shares at arange of $7-50 to $8 .50 and then bumped the range to $9 to $10 before finally, pricing at 11 .

In addition, Salesforce .corn's IPO -- delayed several times -- has been controversial, Thecompany was forced to restate some of its prior results and also came under fire from theSecurities and Exchange Commission after CEO Marc Benioff spoke about the company'sprospects in media interviews, a violation of the so-called quiet period that comes before apublic offering .

That shares gained so much despite this bad press was yet another sign that investors areonce again starting to show interest in younger tech companies .

The tech IPO market is going through a minor renaissance ," said Menlow. "This is anotherencouraging foundation step ."

More to the market than Goggl e

Looking forward, Menlow said that everybody is waiting to see how Google will do . However,he said he'd be wary of the stock, even though he thinks the fundamentals are sound, sinceGoogle is pricing its IPO through a Dutch auction, which will allow the average investor to bidon how much they want to ante up for the stock .

Menlow said this is undoubtedly a fairer way of allocating shares to the investing public, but itsets up the possibility that people will overpay for fear of getting left out .

You have to love the company itself . It caught lightning in a bottle and is a tremendouscompany," i` enlow said . But where we have a problem is that emotionalism will now dictatethe price of the stook . "

But there are other tech IPOs on the horizon that should also generate a lot of buzz .

Online comparison shopping service, Shopping .corn is on tap to go public within the next fewweeks . The company is planning to sell 7 .8 million shares at a range of $14 to $16 share .

h, ti ate ) is tentatively set to spin off itsCell phone manufacturer M. c toral . ( Q. T: Rpsqchip unit, Free cal Semiconductor, next month . Motorola is planning to sell 121 .6 millionshares of Freescale at a range of $17.0 to $19,50, possibly raising as much as $2 .4 billion inthe offering .

And Holmes said that based on Salesforce .com's strong unveiling, he has high hopes forRightNow Technologies, another customer relationship management software company thatfiled to go public last month .

It all just goes to show that there's more to the tech IPO market than Goggle .

"There are a few star deals out there," said Holmes, "These are a spark to the kindling andthat's what we need." u

Find this article at .http,llmoney .cnn.com/2004YO61231technoJogylipolinde)( .htrn

EXHIBIT D

Infonnationweek July 26, 2004

Copyright 2004 CMP Media LL Cinformation W ec k

July 26, 2004

Page 1

SECTION-, NFW ;, SC"AN, `I'echvnoinics, Pg. 18

LEiNcni. 440 words

HEADLINE ; C.F() Lowers Profit Estimate As Salesforce .com Parties

BYLINE, Paul McDougal l

IiJGI.111f:x11' ' :Salcsforce .com Inc . executives may he lording for their days as private corporate citizens . The hostcd software vendor's

initial public al"h ring last month was delayed after (::E0 Marc Bennioff granted a May interview to The New YorkTirtles, possibly violating the Securities and Exchange Commission's so-called quiet-period nrle .

BODY :

Now more troubling news- CFO Steve C;akebread last week said the company's earnings for die fiscal year that

ends in January would .fall between 0 and 3 cents a share on revenue of $160 million to $165 million, about 3 cents shy

of forecasts . Within hours, Saleaforce's stock shed 27% n .fits value, though it gained back more than 1 0% the next day .

C;'akebread disclosed the numbers in Salesforce's typical high-profile style at the New York Stock Exchange, wher e

company execs descended Wednesday ibr analyst briefings and an after-hours cocktail party on the exchange floor . The

session ended with Bcnicrf`f ringinl, the closing bell and hoping it would save hire .

(::.'omrr rndeering Wall Street's fill) attention-the company also had draped the Exchange in Salesforce balulers.-todisclose an earnings miss is a questionable move, so same analysts believe it unlikely execs anticipated the sell-cuff. "I'm

not sure they fully understood. how much investors look at those rturnbers," says analyst Donovan Gow of American

Technology Research, who holds a sell rating on the stock .

Managing a public company is a skill set that Salest rrce execs haven't mastered-one of Ti ny Challenges T ho

company .faces, [.Pow says . Sales4hrc&'s customer base has grown steadily over the past three years, to more than 10,000

business accounts- For the growth to continue, Salesforce must secure bigger customers . Last week, office supplier

Corporate :Express inc . signed up for 3,000 subscription licenses . Salesioree also added Cisco Systems as a customer .

1'k~af"s a start, but Clow fears most big companies want sales-manage ;tnent software that's more customizable than the

Salesforce suite . The problem is that greater customization eats into the cost and simplicity advantages of Salesfbrce's

air-demand, slixug it,nver-tbe-Net distribution model . " .It's a Catch-22," Gow says .

Another headache for Salesforce : Rival Siebel Systems Inc . is ramping up its hosted software business . Last week,

the company reported lower second-quarter revenue and profit but said its CRM Dui]emand offering is picking up

momentum . It also said it formed a business unit devoted to hosted CRM software, adding that quarterly revenue ; for its

on-cicnmand product rose 33% from the previous three-month period . Sicbel didn't provide a base figure, which led

Sales) arce's 13eui.off to offer a dismissive corn ent : "There's a reason why they won't tell you flow many custorriers they

have . "

PAUL MCDOUGALL (paulrncd(7),cmp .corrt)

3~ttp Jlira lbr.~x~atioaweck.carn/

Copyright (c) 2004 CMP Media 1-1- C

WAD- .DATE: July 26, 2004

EXHIBIT E

Sales : orcc .co n Files Registration Stateme nt For Initial Public Offering - Sales Page 1 of 2

FRr.E. CRM# T F.1CA.L I # ~. C. . .c ? .t?AN.Y I IPARlr> 95. I ngiis h (America$ )

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Salesforce . com Files Registration Statement For Initial Public Offering ... . .... ... ... .. .... ..... .... . . .. ... . ..Events

SAN {'RANCI CO, Calif . - DecerTiber 18, 2003 - `3aIe.sforce,com, Inc . announced today that. It; ha Online Event

filed a rvcistration st :at:ernent On Form S-1 with the U .S . Securities and Exchange C,orrirni55io n

(,t',C) for a proposed initial public offering of Its common stock . All of the shares are to be Fold by Live Eventsthe company, P

Morgan Stanley & Co . Incorporated will act as sole book runner for the offering, and co-manager :; Media Kitwill be Deutsche Bank Securities Inc ., UBS Securities L€,C, Wachovia Capital Markets, LLC, an dWilliam t3lair & Company, L .L .C .

Sate: sfor:ce.. .corri is the €eading provider of application services that allow organizations, to easily mshare customer information on-demand . The company provides comprehensive custom e lrelationship management, or c_RM, service to businesses of all sizes and industries worldwide tha t

A registration statement related to those securities has been filed with the SEC but has not yetbecome effective . These securities may not : be sold nor may offers to buy be accepted prior to thetime the registration statement becomes effective . ThIs news, release shall not constitute an offerto sell or the solicitation of an offer to buy nor shall there be any sale of these securities in anystato in which such an offer-, solicitation or sale would be unlawful prior to registration orqualification under the securities laws of any such state .

When available, a copy of the preliminary prospectus may be obtained from Morgan Stanley & Ca .Incorporated, 1.585 Broadway, New York, NY 10036, Attn : Prospectus Departs ent .

Abort salesforce,comSalesforce:> .com is t:he market and technology loader in on-demand Customer RelatloriShipManagement (CRM) . Through its award-winning saiesfarce .com family of products including

1. 1 #: and 5ttt ? the company provides a comprehensive suite of CRM applications tohelp enterprises of all sizes, industries and geographies meet the complex challenge of sharingand managing information on-demand . Salesforce and Supportforce are built on the Sforceclient/service integration platform and Include the Customforce tool for complete on-demandcustomization . f . ;e and allow customers and independent software vendors tocustomize and integrate salesforce .com`s products, as well as build their own on-d, mandenterprise applications . As of January 31, 2005, salesforce .eorn manages customer informationfor approximately 13,9010 customers and approximately 227,000 paying subscribers includingAdvanced Micro Devices (AMD), America Online (AOL), Automatic Data Processing (ADP),Avis/Budget Rent A Car (Cendent Rental Car Group), Dow Jones Newswires, Nokia, Polycorn andSunTrust: Barks . Any unreleased services or features referenced in this or other press releases orpublic Statements are not currently available and may not be delivered on time or at all .Customers who purch<ase our services should r ake their purchase decisions based upon featuresthat are currently available . Salesforce,com has headquarters in San Francisco, with offices inEurope and Asia, and trades on the New York Stock Exchange under the ticker- symbol "CRM" . For

more information please visit http ;// 1 ?..x. . .£ .r ... C?rrl, or call 1-800-NO-SOFTWARE .

(Media Contact :

Salesforcc.coni Files Registration Statement For Initial Public Offe ring y Salestbrce.com Page 2 of ' 2

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ci i Salutions CRM Editions CRM Education NeW &

. : S~i1'j f„()2iC ALlto .T1 .ki.An. . : n .-,~3 ..Mind , ; C .I P'1 C_~1.f ..i n1E1 . 4fcce,S,a, . : C .RM .C,~7 !

#1 ~rk,.l rkc~ A !. s'ks . iot ffl{she Editi,o.n C,.I M tir,yC f'ractlces : { k? 1 Nc,

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Privacy Statement 5ermur 'ty Statement Es G1 +1 ,

The World ' s Leader in (Delivering tin-Denmand CRM Software-as-Servic e

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C`) Copyricght. 2000 .2005 ales€arce,ccr inc . Customer Relationship Management (C ;RRM) . All right; rF serrvcdVarlou : trademarks held by their reap{,ck:iv Owners .

r

EXHIBIT F

UNITED STATE S

SECURITIES AND EXCHANGE COMMISSION '

Washing ton, 1). C. 20549

FORM 8-K

CURRENT REPORT

Pursua nt to Section 1 3 or 1 5(d) of the Securities Exchange Act of 1.934

February 17, 200 5

Date a (' Report (date of carkiot even ; repnrted )

SA ESI. OR E.COM., INC .(E. );8c s um ar Rev.1straut as specified III Charter)

Delaware 001-32224 94-3320693(Stmie iar other juris d iction (C.'a mmdssimi File Numbpr) (I. {'t . S, P.j))P(aycr °

v inc~IrpUtrLth u) W errl it;ratim No. )

The Landmark ( One Market, Suite 300

San Francisco CA 94105

(Address of princitaal exec Ove rillicks)

Registrant's telepho ne number, including a rea code : (415) 901-100 0

NM .

(f odour onine ar former address, if ehuntcd zinc.e lust report)

Check the appropriate box below if the Form 8 -K filing .is intended to sirtuYltaneously satisfy the; filing obligation of the registrant under any of

the fbilowi.nf provisi[onYs :

" Written communications pursuant to Ride 425 o ude r the Securities Act (17 CFR'R 230 .425 )

a", 12)4Soliciting, material pursuant to Rule 1..4a-12 unde r the Exchange Act ( 17 C .:~ 1240 . 1

. . .} r . ..comrne ncem e nt corrirrillni catioris pursua nt to Rule 14CI-2( h) under the i:?xchange Act (17 CTR 240 .14d-2(b) )

Pre-com3-rmcncement c:rxrnrrrurlicaflOlxs pursu mt to Rule 13e-4(c) under the Exchange Act (17 (FIt 240 .13e-4(e))

Sections 2 - Financial Information

r+wr. +~CO 2005 , f!:1 .:)C'xftl ()n l i n , ITI C

Jterrr Z02 •- Resultx of Operations and Financial Conditio n

On February 17, 2005, salesfoice .uonr, inc . issued ; a press release announcing its results for the quarter ended January 31, 2005 . A copy of the

press release is attached as Exhibit 99 . 1 to this current report on Form S-K and is incorporated by reference Therein.

The press release; attached to this Current report on F orm S-K contains non-C AA.F financial inforrriation, in addition to providing there ,.is giant' ; net 41corrnc and earnings per diluted share financial measures on a ( ;;AAP basis :fi]r the periods discussed, the press release also

provides Inon-GAAP net income and earnings per diluted share figures, These non-GAAP financial measures are derived f-am the applicableGAAP figures by excluding a one-time, non-cash expense of $897,000 recorded by the registrant in the 'fourth quarter of the prior fiscal year as

a result of increasing its accrued 1 iability associated with the remaining available office space that was abandoned in December 2001 .

Management believes that by providing these non-G.A..A.i} financial measures investor.5 will have a more complete understanding of

saksfUrcc .corn's underlying operational results and trends in its performance .

The infc.mnation in this current report can .IF`orin S- and the exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 ofthe Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities cif that section, nor shall it bedeemed incorporated by reference in airy filing under the Securities Act of 1933, as amenclud, or the Exchange Act, regardless of any generalincorporation language in such filing-

Section , Financial Statements and Exhibits

Item 9.01 inanci ~ASraterne its and Exhibits

(c) Exhibit s

99,1 Press Release dated February 17, 2005

Signature

Pursuant to the requtrenicuits of the Securities Exchange Act of 1934, as amended, tho l egistrant has duly caused this report to be signed cart itsbehalf by the undersigned hercuato duly authorized .

Dated: llcbruary 17, 2005 sulesfcrce . com, inc .sJ David Schcllhas e

David Schellhase, Se n .ior Vice President and

General Counsel

Exhibit inde x

Exhibit KAJbit TitleNumbe r

99 .1 Press Release dated February 17, 2005

Exhibit 99.1 A

FOR IMMEDIATE RELEASE Contacts'.,feeble Fitzgeral d

sa1esf ~~ ce .coriiInvestor Relations

4 15-536-6250I it ~,iI (r}±~al vtcjrce coo

Janie Hynes

sales oree .cont

Public Relations

<?n0`5 - ;..A R t7rxl.a~ic,................. .

415-90 .1-5079ll ES R 4111estOrC.l~ .c9I) i

Salesforce .cora Announces Record Fiscal Fourth Quarter Result s

` Q4 Revenue soars 82% to $54, 6 milli m year-over-yea r

• Q4 Paying Snbccrihers rise 32,000 to 227,001), up 79% year-over-year and up 16% sequentially

• Q4 Net Income rises to $3.6 million , fronr a prior year Q4 loss of $765,000

• Q4 Earnings per Share rise to 511.03, a significant increase from a loss of $0.02 in the prioryear perled

• Q4 Cash f'rcun Operations rises to $ 211 million , an increase of 244% compared to the prior year period

• Raising,, J'iscal 2006 revenue and earniap guidance rang7e

SAID FRANCISCO, Calif. - February 17, 2005 -- Salesfo:rce .coni (NM" (:RM), the trarket. and technology leader in on-demand cii .5wn er

relationship Fmmainagemennt, today announced results for its fiscal fourth quarter elided January 31, 2005 .

"Thu results indicate a breakout rnoment : salesforce .com .has become the standard for delivering U1tM can clemarrd," said Marc Benioll-,

chairman and CEO of sale orce .eorn . "Gariner Group has predicted that sale sforce corn will become the third largest provider o'f' RM by the

end of 2005, surpassing Oracle and 1'eopleSof combined . Customers are recognizing the benefits ol'on-c emancl success . The next stage of the

on.-demand revolution, which is the Bud of Software, is upon us . "

Sale:sfo .ree .coni delivered the f ollowi:ug results for the fourth quarter of fiscal year 2005 :

Revenue : Total revenue was $54 .6 million, an increase of 82% on a year--over-year basis and an increase cif 18% on a q arter to qu arti Masi .

Subscription and support revenues were $49 .4 million, an increase of 84% on a year-over-year basis and an increase of 19% on a quarter-to-

quarter basis . P:rof essiornal services and other revenues were $5 .2 million, an increase of 60% on a year-over-year basis and an increase of 7%

on a quarter'-to-quarter basis .

Customers and Paying Subscribers . During the fourth quarter, the company added approximately 1,400 customers and approximately

32,000 paying subscribers . As of the end of the fiscal fourth quarter, the company had approximately 13,900 customers and approximately

227,000 paying, subscribers .

Net Income : Net income was $3 .6 million, a significant impravenierit from a loss crl $765,000 in the year ago period, which included a orae-

t'inre non-cash $997,000 charge in the year ago period . Fiscal fourth quarter 2,005 net income grew 67% on a quarter-to-quarter basis .

Earnings per Share : Earnings per diluted share were $0 .03, a significant increase from a loss of $0 .02 in the year ago period, which included

the one-t'ime charge described above, Excluding the one-time charge in the fourth quarter of fiscal 2004, earnings P er diluted share in the year

ago period were approximately break-even .

Cash : Cash from operations for the fiscal fourth quarter was $21 .1 million, an increase of 244% compared to the prior year period ,

Deferred Revenue : [.)efcrred revenue feu the fiscal fourth quarter was $95 .9 million, an increase o 93`X4 on a year-over-year basis and 29% on

a quarter-to-quarter basis .

Salesfurce .com is raising guidance for the fiscal year 2006, ending January 31, 2006 and initiating guidance for its fiscal first : clua.rter 2006

based on information as of 1i'ebruary 17, 2005 :

(s., 2, 01?i:~ . 11XAP thcia .,zr, inc=-

VY0 6 Revenue : Expected to be in the range of approximately $282 million to approximately $287 million, up from prior guidanc e of

appro x imately $275 million to approximately $285 million .

f: Y06 Diluted EPS : k: xpected to be in the range of approximately $0 .11 to approximately .${L 13 based art an estimated average of 123 million

diluted shares mid an estimated effective tax rate o f 25% . " t'his represents an increase from prior guidance: of approximately 0 .10 to

approximately $0 .12 ,

The full year e arnings per share; guidance does not include the incremental impact oft:he recently issued Financial Accounting Standards Board

( .FAS13) stoc k option expense requirement that will become effective in salesforce . com's fi scal t.lrirci quarter 2006 .

tialc t"c) rcc,cnrx ► is providing, for the first time, first quarter fiscal year 2 006 guidance based on information as of Februar y 17, 2005 :

Qi FY06 Revenue : 1. xpecterl to be in the range of approximately $58 million to approximately $60 r.nillion .

QI FY06 Diluted EPS , Expected to he in the range of approximately $0.01 to approximately $0.03 based on an estimated average of 1.19

million diluted shares and an estimated effective tax rate of 25% .

Quarterly conference Cal l

Sale;sforcc . co .ni will host a conference call to discuss fourth quarter results at 2 :00 p .m. Pacific Standard Time today . A live audio wcbca st of

the confe rence call, togethe r with detailed financial inxlbrrryation, can be accessed through the company ' s Investor Relations Web site at

Ixtt:l}=//www . sals sfnrce .con li~rvestur . .in addition , an archive of the webcast can be accessed through the same link, Participants who choose: to

call in to the conference call can do so by dialing (719) 457-260 or (800) 967-7141 . A repl ay will be available until midnight on February 19,

2005 and can be accessed by dialing , (719) 457-0820 or (888) 2 03-1112, passcodu : 8244550 .

About salesforce .corn

Sale:sforce " camrr is the market and technology leader in on-dernand customer relationship management (CPM). '1'l irouglr its award-winning

salesforce .con) Emily of products including

Salesforce , corn { I~tt, :l/w~vv : sale f rc corn ) and Supportfcxrce , coz (ftttp_//wwwsuppctt.fnrcc ., cn. ), the company provides a comprehensive

suite of CRM applica tions to help enterprises of all sizes, industries and geographies meet the complex challenge of sharing and managing

information on-dervand. Salesfbrcc corn and Supportforce .coru are built on the sforce clivntlsorvice integration platform and include the

Custom lbrcc . con-i tool for complete an-demand customization- S1i)rce ( l7tt . /p /rvww _s nr ,, c. ern .) and Custotnforce , com

trttn : //w .,o& trxcr fc )rcc .e ~x~") allow customers and independent software vendors to custnr c and integrate salesfo rce . comn 's products, as

well as build their own on-demand enterprise applications . As ofianuary 3 1, 2005, salcsfi~rc c .c~)rrr manages customer information for

approximate ly 13,900 customers and approximately 227 ,000 paying subscribers including Advanced Micro Devices (AxM17), America Online

(AOL), Automatic Data .Processing (ADP), Avis/Budget Rent A Car (Cenriant Rental Car Group ), Dow Jones Newswires , Nokia, Polyc-oru and

Sun'I'rust Banks . Salesforcc . corn has headquarters in San Francisco , with offices in Europe and Asia, and trades on the New York. Stock

Exchange under the ticker symbo l "CR.". For more information please visit Litt //www,st l e sfurce_GCr», or call 1 8(lt)-X1(7- ;()F'l 'WAR E

1 #

Sales force .corn is a registered traders rk of salesl:orce .corn, inc ., San Francisco, California . Other names used may be tray emarks of their

respective owners .

"Sale l arbor" stets nrcr t under the Private Securities Litigation Reform Act of 1995 : 't'his press release contains forward-looking statementsabout expected revenue and earnings for the first fiscal quarter of'2006 and the full fiscal year 2006, the growing acceptance of the company's

on-demand business model and possible future market share for salesforce .co:m in the C' .RM. rrairket, that involve risks, uncertainties and

assumptions . If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from

the results expressed or implied by the forward-looking statements we make ,

The risks and uncertainties referred to above include - but are not limited to - risks associated with our new business model, our history (,)!

operating losses, the possibility that we will not remain profitable, possible fluctuations in our operatic ; results and rate of growth, errors,

interruptions or delays in our service or our Web hosting, breach of our security measures, the immature market in which we operate, ourrelatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability tocontinue to release new and improved versions of our service, successful customer deployment and utilization of our services, our ability to sellto larger enterprise customers, changes in our a cctive tax rate, fluctuations in the number of shares outstanding, and the negative financialstate meat impact of new accounting rules such as the requirement to expense stock options . Further infam-ration on these and other factors that

could afTQ0 our financial results is included in the reports on Form l0-Q and 8-K and in other :filings we make with the Securities and

Exchange Commission from time to time, including ihetors in our report on Form 10-Q liar the period ended October 3 1, 2004 filed with the

SEC on November 22, 2004 . These documents are available on the SEC Filings section o .f the : Investor information section of our wehsitc at .

www.salestorce .coralsuvestor .

wwranr~~LS1 2005, ErGA.: or,t.irii I" ......... ...

Sales1 rce .cr71n, inc . assumes no obligation and does not intend to update these forward-looking statements, except as :required by law .

salesforcc .co rn, isle .

Condensed Consolidate d Statements of Operations

(in thousands , except per share data)

Revenue :Subscription and supportProfessional services and other

Total revenues(';cast of revenues (1) :Subscription and supportPro . essional services and (Abe r

't'otal cost of revenuesGross profi tOperating expenses (1) :

Research and developmentMarketing and sales

Oietne ra .l and administrative[,ease abandonment (recovery)

Total opcratinng expenses

Income (loss) t'rnni operations

interest, ne t

Other income

Income (loss) Wore pravisiolt for income taxes and

m inor ity interestProvision for income taxe s

Income ( loss ) before minority i.uterest

Minority interest in Consolidated joint Venture

Net income (loss )

Basic net income (loss) per shareDiluted net income ( loss ) per shareShares used in co put'ing basic net (loss ) income pershar eShares used in computing diluted net income (loss) pershar e(1) Amounts include ,;track-based expenses, asfollows :Cast Of revenue sResearch and developmentMarketing and walesGeneral and administrativ e

total stock-based expense s

salesforce co m, inc .

Three mouths b mit'A January 31, War E nded •f i tl3ry 31 ,

~flg$ 20(14 20(15 200 1

(unaudited) (audircd )

49,379 $ 26,802 $ 157,977 .5 85,7905,215 3,251 18,398 10,22 7

54,594 30,053 176,375 96,02 3

4,200 2,223 12,727 7,7825,804 3,199 20,727 9,49 1

10,004 5,422 33,454 17,27 344,590 24,631 142,921 78,75 0

3,159 2,157 9,822 6,96228,431 17,142 96,311 54,600

9,779 5,179 30,268 16,91. 5897 (3,445 )

41,309 25,375 136,401 75,03 23,221 (744) 6,520 3,71 81,155 119 2,621 357163 (43) 12 164

4,539 (668) 9,153 4,239

603 15 1,217 54 1

3,936 (683) 7,936 3,698(350) (K2) (590) (184 )

3,586 $ (765) 7,346 $ 3,51 4

(103 S (0 .02) .5 0 .10 5 0 .1 2$ 0,03 .5 (0 .02) S 0 .07 $ 0.04

103,458 30,617 75,503 29,605

116,909 30,617 110,874 95,409

5 105 $ 165 $ 634 $ 65 536 109 282 46288 465 1,296 2,029

217 483 1,402 1,213

$ 446 $ 1,222 $ 3,614 ., 4,359

~ftd

tc 20)`:i . )-:iX .~2. .. .-.. ... .. ... .... .......

Condensed Consolidated Statemr eats of Operations

As a percentage of total revenues :

(Unaudited)

Revenues :

Subscription and support

Proafissional services and othe r

Total revenuesCost of revenues:Subscription and supportProfessional services and othe r

Total ccrtit of revenues

(:Gross profitOperating cxpefses :Research and development

Marketing and salesGeneral and adm inistr°ative

[,ease ahandomtient (recovery)

Total operating expense.;

Income (lass) .I:rorn operations

Interest, aaca tOther income

Tnceor'rme (loss) before provision for income taxes and minority interest

Provision for income taxes

Incorrmu (loss) before minority interestMinority interest in consolidated joint ventur e

Net income (loss )

Stock.-based expenses as a percentage Of total revenuer, as follows :

Cast of revenue s

Research and developmentMarketan and salesGeneral and administrative

Total stock-based expenses

salesl'aree .co ihwc .

Condensed Consolidated Balance Shed's

(in thousands )

(audited)

Thrse Mouta Ended Januar y 31, Year E"(10 doniiwry 31 ,

Z005 2004 2005 2004

90% 89% 90% 8911

10 11 10 1 1

100 100 100 10 0

7 7 7 811 11 12 1 0

1.8 18 19 i s82 92 81 8 2

6 7 5 7

52 57 55 5 718 17 17 1 8

3 (4 )

76 84 77 786 (2) 4 42 ........... 1 1

8 (2) 5 5(1) .............. (1) (1 )

7 (2) 4 4

7% (3)% 4`%! 4°1

< ±M f/4 ..........- % 1

...........2 1

17-

1 2 1 1

1 %r 4% 2% 5' %

wW-w f" C.7 2005 . ^;f)(::"r X On13 .iie , I TIC .

.rbltuiiry 31, January 31 ,

20(15 2410 4

Asset s

Current as-set:, and cash equivalents S 35,731 5 10,463Short-te.nn marketable securities 83,087 25,34 9Accounts receivable 48,874 26,53 6fcferred commissions 7,556 8,266Prepaid expenses and other current assets 3,467 3,53 2

Total current assets 178,7 :15 74,14 6Marks table securities, noncurrent 87,120 . .. ...

Restricted cash 3,191 3,91 2Fixed assets, not 7,637 5,069Deferred commissions, rti>neurrent 2,057 2,890Other assets 1,779 1,494

Total assets 5 280,499 5 87,51 . 1

Liabilities, convertible preferred stock and stockholders' equity (deficit )

Current liabihties :Accounts payable $ 2,525 $ 2,03 5Accrued expenses and other current liabilities 32,467 17,68 2Income taxes payable 216 534

Def .rrc;d revenue 95,900 49,67 7Current portion of capital lease obligations 563 7 8

Total current liabilities 131,671 70,0061Capital lease obligations, net of current portion 721 -t..ong4errn lease abandonment liability and other 1,596 1,830Minority interest 1,380 775

Total liabilities 135,368 72,61. 1Convertible preferred stack . 61,13 7Stockholders' equity (deficit) ;Conmrtton stock 105 3 2Additional paid.-in capital 217,248 35,58 0Dthrred stock based compensation (5,908) (8,251 )Notes receivables from stock alders (727) (1,674 )Accumulated other comprehensive income (loss) (999) 1 0Accumulated deficit (64,588) (71,434 )

Total stockholders' equity (deficit) 145,131 (46,237 )

Total liabilities, convertible preferred stock and stockholders' equity (deficit) $ 280,499 $ 87,51 1

sales1orce . coni, inc .

Condensed Consolidated Statements of Cash Flows

(in t ousanncls)

Three Months Ended January 31,

2005 2004

Operating activities .Net income (loss)

(ctrl*uOited)

$ 3,586 $ (7ti5 )

C?') 2 005 . EDGAR. 0 r 11 a. 111 , 3,0[:' .

Year k tideu .l sou iry 3 .I,

2[1115 2994

(ludilF,4I )

7,346 $ 3,514

Adjustments to reconcile net i.nco►ne (loss) to cash providedby operating activities :Minority interestDepreciation and amortizationAmortization ofcleferred commissions

Lease z► 1aa donnieznt (recovery )F xpeuses related to stock-based awardsTax benefits from employee stock plansChanges in assets and liabilities

Net cash provided by operating activities

Investing activities :Restricted cas hChanges in marketable securitiesCapital expetiditure s

Net cash used in investing activities

Financing; activities :Proceeds fiom Ow issuance of common stock, net of issuancecost sProceeds Isom the exercise of stock optionsCollection of'notes receivable sPrincipal payments on capital lease obligationsRepurchase of s invested share s

Proceeds from subsidiary stack offerings

Net cash provided by financing activities

Effect of exchange rate change s

Net increase in cash and cash equivalent sCash and cash equivalents , beginning of period

Cash and cash equivalents, end of period $

sulcs£arce.eom, Inc .

Additional Metric s

Customer and subscriberdata :Approximate number of

customersApproximate number ofpaying subscriptions (1)Full Time Equivalentl:ieadeountFinancial data :Cash, cash equivalents andmarketable securities

Deferred revenue $

Jili,u y 31, October 11,

2005 1044

350 82 590 18 4921 635 3,147 2,59 1

3,875 3,116 1 .5,598 8,599897 (3,445 )

446 1,222 3,614 4,35 9798 798

11,153 959 24,779 5,97 9

21,128 6,146 55,872 21,78 1

(264) 721 (179)(8,703) (1,399) (145,612) (18,()49 )(2,265) (1,395) (4,308) (2,916 )

(11,232) (2,784) (149,199) (21,144 )

113,768

2,553 665 4,746) 1,4801,043 . .. .,,. 1,043(139) (85) (493) (531 )

- (1) (254) (17 )40 167

3,457 579 118,850 1,099

(378) (14) (255) 1 8

12,975 3,927 25,268 1,75422,756 6,536 10,463 8,709

35,731 $ 10,463 $ 35,731 $ 10,403

J!dy 31, Apr il 313, ,; RnuSry 31, 1)c.to3,Cr 31,

2004 2004 2004 204,4

13,9010 .12,500 11,100 9,800 8,701) 7,700

227,000 195,000 618,000 147,000 127,000 107,000

767 679 594 518 444 41 2

205,938 $ 185,014 $ 172,627(2) 5 43,733 5 35,812 $ 30,486

95,900 $ 74,240 $ 61,557 $ 52,340 `6 49,677 $ 34,408

Three Months k ndtd J R uuJry 3 1 . Year r,nd d January 3 1 ,

Nw«wrw~1 ~"' A 5Y () ~1 1' DGA . .Kl

200-5 2064 211(15 2004

(tins Hind) (audited )

Reventies by geography :Americas S 42,879 S 24,357 $ 140,871 $ 78,958Europe 8,175 3,857 25,201 t x,75 4Asia Pacific, 3,540 1,839 10,303 5,31 1

S 54,594 S 30,053 S 176,375 $ 96,023

As a percentage of totril revenues :

Revenues by geography .Americas 79% 8111/1 80% 82

Europe 15 13 14 1 2Asia Pacific 6 6 6 6

IOO% 100`1 100% 100°

(1) Paying subscriptions are defined as unique user accounts, purchased by customers :for use by their employees and other customer-a borized users tlhat have not been suspended for non-payment and fi . r which we are recognizing subscription revenue .

The October 31, 2004 and Jtily 31, 2004 paying subscription metrics excluded approximately 2,500 and 2,000, respectively, payingSubscriptions Who were using the Company's service, but for which the Company delayed revenue recognii .io:n until specific new techn.logywas completed .

(2) Includes net proceeds of $11 18 million from t e Company's sale of common stock during its initial public offering in June 2004 .

SaJesfor ee cotr1, inc.

CAA:F / Non-GA.AP Reconciliation

(unaudited )

(In tho sands, ekcepI pmr share dada)

A reconc iliation between operating expenses on a GA.AP

basis and no.nn-GA.AP operating expenses is as follows :

C1AA. 3 operating expense sLease abandonment (re covery)

Ncxr-( ;1A.AP operating expense s

A reconciliation between income (loss) 1=rom n operations on a..OA.AP basis and nor!-GA.A.P Income from operations is as

follows :C3AAP income (loss) from operations $

),.ease abandonment (recovery)lNou (,iAAP income from operations

A reconciliation between income (loss) before provision fbr

income ta xes and minority interest and non .- ,iA.A.F income

before provision for income taxes and minority interest is as

:follows ;

GA.AP income (lass) before prov:isiou for income taxes and

minority interest

Three n10nttls ended January 31 . War ended January 31,

2m15 2004 2ol15 2004

41,309 $ 25,375 $ 136,401 5 75,032897 (3,445 )

41,369 24,478 136,401 78,477

3,221 $ (744) $ 6,520 $ 3,718897 (3,445 )

3,221 153 6,520 273

4,539 $ (668) $ 9,153 5 4,239

wnwrwr aK~~~ Ci;} =2 0 055 . EDGAR OA 11. inc , '7: nc

I-ease abalx .1onrricIA (recovery) 1197 (3,445 )Non-OA,A.P income before provision for income Laxe"s and 4,539 229 9,153 794

minority interes tA reconciliation between provision for iaxcon taxes on aGAAP basis and non-GAAP provision For income taxes is a s

follows :[.IA .AP provis ion for income taxes `6 603 $ 15 S 1,217 $ 54 1Income tax e ftect of lease abandonme n t (recovery) 114 - (438)

Non-GAAP' provision for income taxes 603 129 1,217 103

A reconciliation between income (loss) before minority

interest on a (3AAP basis and non-GAAP income before

minority interest is as follows :

CiA.AP income ( loss ) before minority interest $ 3,936 -S (683) 7,936 $ 3,69 8

Lease abandonment ( recovery) 897 -- ---- (3,445 )Income tax effect ............ (114) 43 8Non-GAAP income btrure minority intere s t 3,936 100 7 ,936 69 1

A reconciliation between not income (loss) on a {GAP basis

and non-G.AA.P not income is as follows :(3A.A:1' net income (loss) $ 3,586 $ (65) $ 7,346 5 3,51 4

Lease abaud onlnent (recovery) .............. 897 (3,44-5 )Income tax effect - (114) 43 8

Ncynw[:iAAP net income 3,586 18 7,346 507A reconciliation between basic net income (Loss) per share an

a GARY basis and non-(MAP basic net .i .ncomme per share is

as follows :GAAP basic net mco w (loss ) per share $ 0 .0347 $ (0 .025) $ 0.097 $ 0.11 9

I.-case abandon rlent ( recovery) -,. 0-029 --- (0-116 )

Income tax effect ( f? .004) -- 0-01 5Nun-GAA.P basic net income per share $ 0 .0347 $ 0-001 $ 0.097 $ 0.01 7

A reconciliation between diluted net income (loss) per share

on a G MAP basis and non-G.AA .1' diluted net income pe rshare is as Follows :C,iAA.P diluted not inwnme. (loss) per share 5 0.031 $ (0 .025 ) $ 0.066 $ 0 .037Lease abandonment ( recovery) ............. 0,029 (0 .036 )

Income tax effect ( 0.004) 0 .005

Nary-(3 AA.P diluted net income per share .~0 0.031 S 0 .01)1 $ 0-066 $ 0 .005

To supplement our consolidated financial statements presented on a (3AAP basis, salesforce-cum uses non„( :,A.Ai' measures of income from

operations, net income and earnings per diluted share :, which are adjusted to exclude certain costs and income that we believe are appropriate toenhance the overall understanding of our past financial performance and also our prospects for the futuure . These ad justnrcr ► ts to our (3AA .P

results are made with the intent of providing both management and investors a r :►ore complete understanding Of salesforce .caun's underlying

operational results and treads and our performance .

We believe the lease abandonniertt (recovery) items recorded in the third and fourth quarters of fiscal 2004 to be outside of our core Operating

results and thus appropriate; to exclude from our financial results .

The presentation of additional infosrr. Lion is not n want to be considered in isolation car as a substitute for net income or diluted net income pershare prepared in accordance with generally accepted accounting principles in the United States-

End of Filing

t;) 200 7 . EDGAR Ch)l,'.,s7,e, i :))C.

EXHIBIT G

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, U. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 1 3 or 15(d) of the Securities Exchange Act of 193 4

November 17, 2004

Ttale of licpmrt (date of rjkrticsl event reported )

SALESFORCE,COM, I NC .(Exact nanny, of ket ;islraot 31 u fipeci ied in charter)

Delaware 001-32224 94-3320693(Stale or usher lur4dWi 0un (Ci mmisNtun File. Nuiobet') (1- R. S. E.tplvyr. r

(31 incorpuratiun) [kn6fication No.)

The Landmark (0) One Market, Suite 300

San Frandsen CA 941.05

{Addrrs~ of prfnr JF cxrcuEive offices)

Registrant's telephone number, including area code : (415) 901-700 0

N/A

(Fornwr narar or fanner edtresu. if vhangrd 9m r. best report)

Check the appropriate; box below if the Form 8-K tiling is intended to simultaneously satisfy the filing obligation of the registrant under any of

tile f] I owing provisions ;

Witten communications Pursuant to Rule 425 under the Securities Act (17 (.FR. 230.425 )

Soliciting materia l pursuant to Rule 14a-I2 under the Exchange Act (17 (FR 240 .14a-12)

. . 1,t.e,.comIuence merit communications pursuant to Rule 14d-2(b) under the Exchange Act (17 C FR 240 .14d-2(h) )

. . Pre.-coxnme:ucemcnt communications pursuant to Rule 13e-4(c) under the 1 xchalsge .Act (17 (FR 240 .13e .4(c) )

Section 2 - financial Information

« ir Cis 2 o 0 5 , ixrtli,:a<_,.. . .. .

Petri 2. 02 - .Results of Operailoas and Financial Conditio n

On .November .17, 2004, salc sli~rce .cc3r , inc_ issued a press release announcing its results for the quarter ended October 31, 2004 . A copy of thepress releases is attached as Exhibit 99 .1 to this current report on Form 8-K and is incorporated by reference herein .

The press release attached to this current report on Form 8-K contains non-GA AP financial infor nation . I:n addition to providing theregistrant's net inconie and earnings per diluted share financial measures on a (3AAP basis for the periods di .scusse:d, the: press rclaasc also

provides nron-(IAAP net income and earnings per diluted share Figures . These n.nn-(3AAP Fu3ancial measures are dcrivad .trom the applicable

(3AAP figures by excluding a Uric-time, non-cash gabi of S4 .3 million recorded by the registrant in the third quarter of the prior fiscal year as a

result of the reversal of a previously recorded accrued liability associated with abandoned office space . Management believes that by providing

these non-C:rA.AP financial measures investors will have a more complete understanding of salesforce .con:M's underlying operational results and

trends in its perf`c rni tnce .

The i.ntbrn aticzm in this current report on Form 8-K and the exhibits attached hereto shall not be d e e m e d "filed" f o r poi-poses of Section I S ofthe Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the lidbilitic.s of that section, nor shall it be

deemed incorporated by refhr .nce in any filing under the >Securities .pct of 1933, as amended, or the lxchangc Act, regardless ofany general

incorporation language in such filing .

Section 9- Financial Statements and Exhibits

item 9.01 .I{1n +:nciul 5't ter a its and .aC xhibits

(c) Exhibit s

99.1 Press Release dated November 17, 2004

Signature

Pursuant to the require~zar zits of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to he signed on itsbehalf by the undersigned hereunto duly authorized .

.Dated: November 17, 2004 salesforae . corn, inc ./s/ David Schelihas eDavid Schellhase , Vice President and Ouneral Counsel

Exhibit inde x

L'xi bit EALU Ti1I0

wane

99,1 Press Rclease: (fated November 17, 2004

Exhibit 99 . 1

FOR IM .MEPIA'I'E RELEASE Contacts :Joelle Fitzgerald

salesforcc .cou nInvestor Relations

41.5-536-625 0i t1tzgerald6i)sa lesfo rce ,eorn

2 003, F,t;x ;As. C,)n'l.i.ne., Inc

Jane HyneS

s :rl '4t'o rce .r n Ul

Public Relation!

41 .5-901-5079

i ttyncns(u)w ales Lo r..re.C parr

Salesforce .caut Announces Third Quarter Fiscal Year 2005 Results

• Revenue .Inerea, rs,s 82% to $46.4 m illion year over year

• Paying> LS'uhSc'ribers Increase 81% to 195,000 year over yea r

• Customers Increase 62% to 12,5t)0 year over year

• Net hwome Increases 84% sequentially to $2.2 millio n

SAN FRANC.iSCO, Calif. ..,.,November 17, 2004 ,- Salesfbrce .com (NYSE: CRM ), t11e Irl:irlcet art+~ t c.hnology leader in on demand customer

relations hip rilanagerrment, today aruiou:nced results for its third fiscal quarter ended October =31 , 2004 .

"We are pleased with the continual ninrnenrtum we are seeing in our customer and subscriber base," said Marc I3eiuo :f€', chaini-vin and C 'U'[..) of

sale0brcc .com . "The growing acceptance of the on-demand computing model is clear , from the small ; it to the largest companies in the world,

With our recent Wi .Rnter05 release, we have set the stage to become the platform of choice .for on-demand applications . "

Salesforce . corn delivered the following results for the third quarter of fiscal year 2005 ;

Revenue ; Tota l revenue was $4( . 4 million, an increase of 82% on a year-over-year basis and an increase of 14 9/o on a quarter-to-quar . e;r basis .

Subscription and support revenues were $41 .5 million, an increase of 94% on a year-over-year basis and an increase of 15`%, on a quarter-to-

quarter basis . Professional services and other revenues were $4 . 9 million, an increase of 66% on a year-over-year basis and an increase of 7%

on a quarter'- to-quart s basis-

Net [ricerne : Net income was $2 .2 million, a significant reversal from a loss o $ 100,000 in the year ago period , excluding the b e nefit (.):f a one-

time noon-cash gain in the year ago period . As reported previously, in the fiscal third quarter of 2004, which ended October 31, 2003, the

company entered into an agreement releasing it from future obligations associated with a lease of abandoiw d office space . A s a resl.ult, the

company recorded a one- ti mme 11011-cash gain of $4 .3 million in last year 's third quarter, whicl.t was the result Of it reversal Of an accrued l .lab:iliry

associated wi th tile office space . Including, the one-time gain, fiscal third quarter 2004 net income was $3_g million. Fiscal third quarter 2005

net incomf, grew 84%<, on a quarter-to-quarter basis ,

Earnings per Share ., Earnings per diluted share were $0 .02, a significant increase from break-even in the year ago period, alter excluding the

benefit o f the one - time, non-cash gain described above, Inclu d ing the benefit of the one - time, non-cash $43 million gain, earn ings per diluted

share in the year ago period were $0,04 ,

Cash ; Cash from operations .for the fiscal third quarter was $13 . 2 million, an increase of 91 % compared to the prior year period .

Deferred Revenue , Deferred revenue for the fiscal third quarter was $74 ,2 million, an increase of 116% on a year-over-year basis and 20% on

a quarter-to-quarter basis .

Customers and :Paying Subscribers : t uring the third quarter, the company added approximately 1,400 customers and app:roximatcly 27,001)

paying; subscribe rs . As cif the end of the third fiscal quarter , the company had approxi mately 12,500 customers and 195,000 paying subscribers .

The paying subscribe r numbers exclude an aggregate of approximately 2,50 0 paying subscribers who are using our product but for which we

have delayed revenue recognition until speci fic new technology for which customers contracted is completed .

Sales€ibrce . corn is raising its guidance for the fiscal year 2005, ending January 31, 2005 based on infonnation as of November 17, 2004,

FY05 Revenue : Expected to be in the range of approximately $172 million to approximately $ 174 million, up from prior guidance of $165-

r'..wrr~ f17 2005 . Inc,

I70 million .

FY05 Diluted EIS : Expected to be in the range of approximately $0 .01 to approximately $0 .05 based on an estimated average of 11 .0 million

diluted shares and an ef1°ec;t:ive tax rate of 13`1s . This represents an increase from prior guidance of $0 .02 to $0.04 .

Sa.lesiorce .corn is providing, for the first time, (till fiscal year 2006 guidance based on information as of November 17, 2004 :

VY46 Revenue : hxpectecl to be in the range of approximately $275 million to approximately $285 million .

FY06 Diluted EPS : Expected to be in the range of approximately $0 .10 to approximately $0 .12 based on an estimated average of 1 .21 million}

diluted shares and an effective tax rate of 25% .

Quarterly Conference Call Salesfnrcc .uurtr will host a conference call to discuss third quarter results at 2 :00 p .m. Pacific Standard 'l'ure

today- A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company'sInvestor Relations Web site at krttp ://www .salesforcc .conr/investc)r . In addition, an archive of the welaeast can be accessed through the sam e

link- Participants who choose to call in to the conference call can do so by dialing (888) 202-2422 or (913) 981-5592 . A replay will be availableuntil midnight on November 22, 2004 and can be accessed by dialing (719) 457-0820 or (889) 203-1112, access code 982038 .

About salesforce .eom

Sall sforc .com is the market and technology leader in on-demand customer relationship m anage meat (C .RM), Through its award-winningsalesforce .conl family of products including Salesforce .com and Supportforee .corn, the company provides a comprehensive suite of CRMapplications to hell, enterprises of all sizes, industries and geographies meet the complex challenge of sharing and managing information ox--

dcrrmarnd . Saleal"orce .com and Sulrportforc;e .c;oin are built on the sforce clicutlse .rvice integration platform and include the Custoiul.'urce .com

tool .kit for complete ran-demand customization, Sforce and Custorrrforce .com allow customers and independent software vendors to customizeand integrate salesforce,cotn's products, as well as build their own orr-derr rd enterprise applications, As of October 31, 2004, salesfforce .cornmanages customer in,fonl ttion for approximately 12,500 customers and approximately 195,000 paying subscribers including Advanced Micro

Devices (AM!)), America Online (AOL), Automatic Data Processing (ADP), Avis/lludget .R.en.t A Car (Cendant Rental Car Group), Dow Jo.ne .5

Newswires, Nokia, :Polycom and Sutr'1'rust Banks, Salesfotce .cozn has headquarters in San Francisco, with offices in 1, urope and Asia, and

trades on the New York Stock Exchange under the ticker symbol "CRM" . For more information please visit littp ://www,salQsforce,c orn or call

I-800-NO-SOFTWARE-

Sales forc v,corn is a registered trademark of salesforce .cozrr, inc ., San Francisco, California, Other names used may be trademarks of their

respective owners,

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995 : This press release contains Forward-looking statements;

about expected revenue and earnings for fiscal years 2005 and 2006, the growing acceptance of tlie company's on-demand business model, ourestablishment as an end-to-end platform for on-demand applications and the market's acceptance of and continued reliance upon, on .-der nand

application usage generally, that involve risks, uncertainties and assumptions . if any such uncertainties materialize or if any oftlre assumptionsproves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we rrrake.

The risks and uncertainties inferred to above include - but are not limited to - risks associated with our new business .model, our history of

operating losses, the possibility that we will not rem in profitable, possible fluctuations in our operating results and rate of growth, errors,interruptions or delays in our service or our Web hosting, breach of our security rrtcasures, the immature market its which we operate, ourrelatively limited operating history, our ability to hire, retain and motivate our employees and manage out growth, competition, new releases o four service and successful customer deployment and utilization and selling to larger enterprise customers and the negative financial statement

impact of new accounting rules such as the proposal to expense stock options . Further information on these and tither factors that could affectour financial results is included in the reports on Form l0-Q and 9-K and in other filings we make with the Securities and Exchang e

C"onmrrrission from time to time, including factors in our report on Form 10-Q for the period ended July 31, 2004 fi led with the SEC on August

25, 2004, These documents arc available on the 91-3C Filings section of the Investor Information section of our website a t

www_ s alesforce, coml]/i nves tor .

S ileslorce .cow, inc . assumes no obligation and does not intend to update these (forward-looking statements, except as required by law

sal.€sforce.cotu, ire ,

Condensed Consolidated Statcruentr of Operations

(£n thousands, except per share data )

(Unaudited)

wWwww~ °~f ,7 L{' 2005 . EDGAR. c)Pk .J..7JI ' ,.......... . . ........- . ..., ._-._ .... . . . ........ .. ..... .....

7'tri,ce Months E,ndcd Nine M011th W.,,rLthd

October 31, October 31,2004 2011 24104 Y(Il O

Revenues

Subscrip tion and suppo S 41,465 .5 22,480 $ 108,598 $ 58,994

Professional services and other 4,896 2,954 13,183 6,976

Total revenues 46,361 25,434 121,781 05,970Cost ofre: venues (1) :Subscription and support 3,546 2,143 8,527 5,55 9

professional services and other 5,359 2,525 14,923 6,29 2

Total cost of revenues 8,905 4,668 23,450 11,85 1

Gross pro it 37,456 20,766 98,331 54,11 9Operating expenses (1) ,Research and development 2,462 1,88() 6,663 4,80 5Marketing and sales 24,940 14,597 67,880 37,45 8

GQncral and administrative 8,281 4,320 20,489 11,73 6

Lease abandonment (recovery) (4,342) -. (4,342 )

Total operating expenses 35,683 16,455 95,032 49,65 7

Income from operations 1,773 4,31 1 3,299 4,46 2

Interest, net 975 84 1,466 23 8Other income (176) (38) (151) 207

Income before provision for income taxes and minority interest 2,572 4,357 4,61.4 4,907Provision for income taxes 342 455 614 52 6

I.ncor before minority interest 2 ,230 3,902 4,000 4,38 1

Minority interest in consolidated joint venture (77) (113) (240) (102 )

Net income .5 2,153 $ 3,789 $ 3,760 .5 4,279

Basic net income per share $ 0,02 $ 0,13 $ 0.061 . 0-1 5Diluted net income per share $ 0 .02 a 0 .04 .5 0,03 $ 0 .0 4Shares used in computing basic net income ; per ,hare 102,337 29,906 66,183 29,26 7

Shares used in computing dilated net income per share 116 ,176 95,521 . 108,701 98,97 5

(1) Amoun ts include stack-based expenses , as follows :

Covet of revenues $ 172 $ 177 r 529 $ 490

Research and development 77 109 246 353

Marketing and sales 386 529 1,208 1,56 4

General and administra tive 556 194 1,185 730

Total stock-based expenses S 1,191 $ 1,009 $ 3,168 a 3,137

sales force .co III, inc.

Condensed Consolidated Statements of Operations

As a percentage of total revenues :

(Unaudited)

Dim Months H nc i Mae Months Ended

Octffl rir 71, October ,41 ,20l4 24103 24104 2043

Revenue s

w. ...ts) '.>,CrnS . EDGAR c:.)nl a .nr: , inc

Subscription and support 89 % 88 ,/ 99% 8911/1

Professional services and titer 11 12 11 1 1

Total .reve sues 100 100 100 100

Cost ofrevenues :Subscription and support 7 8 7 8

Professional services and other 12 10 12 1 0

Total cost of tvve.nucs 19 is 19 1 s

(Goss profit 81 82 81 8 2

Operating expenses :Research and development 5 8 5 7

Marl eting and sales 54 57 56 5 7

General and administrative 18 17 17 1 8

Lease abando.mnent (recovery) - (17) _ (7 )

Total operating expenses 77 (i5 7$ 7 5

Income from operations 4 17 3 7

11n.t :rest, net 2

other income ............. ............

income beiCIre provision for income taxes and minority interest 6 17 4 7

Provision for income taxes (1) (2) (1) (1 )

Income before minority interest 5 15 3 6

Minority interest in consolidated joint venture _ .. .... .......

Net income 5% 1501, 3"/} 6`E

Stock-based expenses as a percentage Of total revenrues, as follows :

Cost of revenues 1 % 104 1 % 1

Research and development - 1

a:rkctirg and sales 1 2 1 2

(.General and administrative 1 I I I

Total stock-based expenses 3% 4 3% 5 %

sales foree ,c w7n, inc.

Condensed Cow alidated Balance Steels

(in thousands)

[) O WAcr 3 h, JYrwary 31 ,

24!J4 2004

(E,nAUSl fted) (2ultated )

AssetsCurrent assets :Cash and cash equivalents $ 22,756 $ 10,46 3

Short-term marketable securities 91,641 25,34 9

Accounts receivable 37,535 26,53 6

Deferred commissions 6„843 8,26 6

Prepaid expenses and other current assets 4,145 3,53 2

Total current assets 162,920 74,146

w•••~ {f i } ( 0 5 . EDGAR Or .), :.i. xxe 1' c .--- . .... ..- . . . ....... . .. . . ... . .......

Marketable securities, noncu.rrcntRestricted cashFixed assets, notDeferred C0MMissions, (noncurrent

Other asqets

Total asset s

Liabilities , convertible preferred stock and stackbolders ' equity (deficit)Current liabilities :

Accounts payableAccrued expenses and other current liabilitiestiicoine taxes payable

4l'erred revenue

Current portion of capital lease obligations

Total current liabilitie sCapital lease obligations, net of current portion

Long-term Lease abandonment liability and other

Minority mtcres I

Total l iabilities

Convertible preferred stockStockholders' equity (deficit),C'onurion stockAdditional pairs-in capita lDeferred stock-based co peusation

Notes receivables fro x stockholdersAccumulated other comprehensive incomeAccumulated deficit

Total stockholders ' equity (deticit)

Total liabilities, convertible preferred stock and stock-holders ' equity ( deficit)

salcsforce .coin, inc.

Condensed Consolidated Statements of Cali Flows

( in thousands)

IJnaucljted)

Operating activities :N Qt iiicoir eAdjustments to rrconcilc net income to cash provided by operating

activities ,Minority interestDepreciation and amortizationAmortization of deferred commissionsLease abandon iient (recovery)Expenses related to stock-based awardsChanges in assets and liabilitie s

Net cash provided by operating activities

Three Months i£:ildedC4et++trer 31 ,

7OD4 1003

2,153 S 3,789

70,617

2,9276,5251,9361,77 8

246,703 $

3,844 $26,75 5

41474,240

561

105,814862

1,6421,030

109,348

103213,E+7(l

(6,734)(1,748)

38(68,174)

137,355

246,703 8

3,9125,0692,8901,494

87,51 1

2,03517,682

53449,677

78

7{),0[)(:i

1,830775

72,61161,137

3235,580(9,251)(1,674 )

1(?(71,934)

(46,237)

87,51 1

Nine Months EndcatOctober 33 ,

1404 2003

3,760 8 4,279

77 113 240 102800 6.31 2,227 1,956

4,255 2,232 11,723 5,48 3(4,_342) (4,342 )

1,191 1,009 3, 168 3,1374,674 3,456 13,626 5,020

13,150 6,888 34,744 15,635

investing activities :Restrkcte:c1 cash 231 (1-52) 985 (1.79)

Changes in marketable secu'r'ities (50,724) (6,300) (136,909) (16,650 )

Capita] . expenditures (1,281) (712) (2,043) (1,531 )

Not cash used in inve sting activitie s (51,774) (7,164) (137,967) (18,360 )

Financing activities :Proce;eds from the issuance of common stack, net ofisstlance costs .............. ------- 113,76 8

Proceeds from the exercise of stock options 459 640 2,193 81 5

Principal payments on capital lease obligations (139) (136) (354) (446 )

Repurchase of uunrvested shares (211) (754) (16 )

proceeds from subsidiary stock offerings - 167 40 167

Net cash provided by (used in) financing activities 1.09 671 115,393 520

Effect of exchange rate changes 178 11 123 3 2

Net increase ( decrease) in cash and cash equivalents (38,337) 406 12,293 (2,173 )

Cash and cash equivalents , beginning of period 61,093 6,130 10,463 8,709

Cash and cash equivalents , end of period S 22,756 $ 6,536 5 22,756 S 6,536

salesforee . eo n, inc.

Additional Metrics

October M1, July 31 . April Al, J . uuxry It, 0vtober St ,2W4 2004 2004 ZUU4 2 00

Customer and subscriber data :Approximate number of custo mers 12,500 11,100 9,800 8,700 7,700

Approximate number of paying subscriptions (I) 195,000 168,000 147,000 127,000 107,00 0

Full Time Equivalent headcount 679 594 518 444 41 2

Financial data .Cash, cash equivalents and marketable securities $ 185,014 $ 172,627(2) $ 43,733 $ 35,812 30,4815

Deferred revenue $ 74,240 $ 61,557 $ 52,340 $ 49,677 8 34,40 8

'rhrre t%l u1h9 Ended NL w Mpaths Ende dOc.tuher 31 ,

Orfubu 31 ,2014 2410 3 2004 zoo-l

(unaudited) (UYYxu(kYir. (l)

Revenues by geography :Anwricas $ 37,150 $ 20,646 5 97,992 $ 54,60 1

Europe 6,56(1 3,167 17,026 7,897Asia Pacific 2,645 1,621 6,763 3,47 2

$ 46,361 k 25,434 S 121,781. S 615,970

As a pe: rcenloge of total revenue sRevenues by geography ;Americas 80% 8I5 80%, 83%.

Europe 14 13 14 1 2

Asia Pacific 6 6 6 5

100"% : 100%, 1.00% 100

c 2 C 0 .`.i . EDGAR Dn . i rac-. , ...... ................... .. .... ..............---. .. ........................, ......

( 1 ) Paying subscriptions are defined as unique user accounts, purchased by customers for use by their employees and other custoRZmer-which we are recognizing subscription revenue .authori„c d users that have not been suspended for non-payment and for whic h

The October :31, 2004 and July 31, 2004 paying subscription metrics do not include 20,000 subscriptions purchased by a nationalprofessional organization since those subscriptions were priced at a nominal fee pe r subscription per month and provide only limited rightsto access and use certain features of the Company's service . The Company believes that excluding the 20,000 subscriptions provides amore accurate representation of its numbers .

Also, the October 31, 2004 and July 31, 2004 paying subscription metrics exclude approximately 2,500 and 2,000, respectively, paying,subscriptions who are using the Company's service, but for which the Company has delayed revenue recognition until specific newtechnology is complete d

(2) Includes net proceeds of ,$ 1. 1 3-8 million from the Company's sale of coriur'ron stock during its initial public offering in June 2004 .

saiesforce,crrrr), inc .

GAAP I Non-GAAP Reeonclllation

(unaudited)

(in u,ou xr Fuh, a xeepr pi'r th4Xr ' dgta)

A reconciliation helwec: n operating expenses on a (r .A.AP basis and mean -< AAP

operating expenses is as :te,llows :GAAP operatin ; expensesLease abandournent ( recovery)Non-(irkAl' operating expensesA reconciliation between income from operations on a G.A..A.P basis and non-G AAP

income from operations is as follows :

(,AA.P income from operationsLease abandonment (recovery)Non-GA.AP income (loss) fro operation sA reconciliation between income before provision for income taxes and minorityinterest and non-OW income before provision for income taxes and minority

interest is as follows :GA.A.1' in come before provision for income taxes and minority interest

Lease abandonment (recovery)Non-C:3A.AP income before provision for income taxes and M. inor'ity interest

A reconciliation between provision for income taxes on a GAAP basis and xion-GAAP

provision for income taxes is as follows ,

(3AAP provision for weo ne taxesIncome tax e ffect of lease abandonment (recovery)

No -G.A.A..P provis :ion Ibr income taxes

Three M 0110H ended 5h itlrmths cnEled()etrrher 31, (k.Olr r 31 ,

2004 z0 o.3 2004 2003

$ 35,683 $ 10,455 $ 95,032 `6 49,657(4,342) (4,342 )

35,683 20,797 95,032 53,999

Is 1,773 $ 4,311 $ 3,299 $ 4,462(4,342) (4,342 )

1,773 (31) 3,299 12 0

$ 2,572 $ 4,357 5 4,614 5 4,907(4,342) ----. (4,342 )

2,572 1 .5 4,614 56 5

$ 342 $ 455 $ 614 $ 520. .... . (453) (459)342 2 614 67

Thre• Ui ,fln s rnkled Nine rrwntlis traded(kt !, r 3A, I;k in r 31 ,

w~ ..~O + 14"C71 200 5 . au(:innn (,)7 ,1 3 .714'.

(ip f nIAs4*n4.4, ax~rp~ prr .. hilrc claw}

A rccoTictiation between income before minority jntere. t on a GAAP basis and

non-(iAAP income before l ):inority interest is as follows ;

GAAP income b fore minority interestLease abandonment (recovery)Income tax effectNon-GAA11 income before minority interes t

A reconciliation between net income on a C.3A.AP basis and notr-GAAP net income

is as follows ;,C.iAAP net incomeLease, abandonment (recovery)Income tax effectNoel-GA.A.P net income (loss)A reconciliation between basic net income per share on a OA .A.P basis and non-

(1/rAP basic net income per share is as 'follows :GAAI" basic net income per share

I :.case abandonment (recovery')Income tax effec t

Nnz1-GAA.P basic not income (loss) per shar eA reconciliation between diluted net income per share on a GAAP' basis and iron ::

C.i .AAP diluted net income per share is as follows ;

CCAAP dilutcd n t income per shareLease abandonment (recovery)

Income tax effec t

Non-(-'YAA .P diluted net income (loss) per share

204?4 2003 2004 10 0

$ 2,230 $ 3,902 $ 4,000 $ 4,38 1(4,342) .-..,.., (4,342 )

453 .... ...... 4592,230 E3 4,000 498

$ 2,153 $ 3,789 5 3,760 $ 4,279(4,342) .......... . (4,342 )

453 4592,153 (100) 3,760 39(

$ 0.021 n 0.127 $ 0.057 S 0,14 6........... (0-145) -- (0 .148 )........... 0.0 15 -- 0,01 6

$ 0.021 $ (0,003) $ 0,057 $ 0,014

$ 0.019 $ 0 . 040 S 0 .035 $ 0 .043(0 .045) (0,044 )

- 0 .002 0 .0055 0 .019 $ (0 , 003) $ 0 ,035 $ 0 .0 04

To supplement our consolidated financial s tatements presented on a GA .A.P basis , salesforce .com uses eon-CiAAP} measures of inco me from

operations , net income a nd earnings per d iluted share, which are adjusted to exclude certain cost . and income that we belie ve are appropriate to

enhance the ove rall understanding of our past financia l performance and also our prospects for the .future . These adjustments to our UA.A..P

results are made with the intent of providing both management and investors a more complete understanding of salcqf6rco.C0llI'8 Underlying

operational re ults and trends and our performance ,

We believe the lease recovery item recorded in the qua rter ended October 31, 2003 to be outside of our core operating results and thus

appropriate to exclude from our financial results .

The presentation of additional information is not meant to be considered in isolation or as a substitute for tie t income or diluted net income per

share prepared in accordance with generally accepted accounting principles in the United States ,

End of Filin g

(<1 2005 . Online i',n.c ., , ....:..... ......................... ......... .- .. . ....... --.. .... -- ..... .........,..........

EXHIBIT H

UNITED STATE S

SECURITIES AND EXCHANGE COMMISSIO N

Washington, 20549

FORM

CU.JR .R:ENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1.934

August 19, 200 4

bate of krporl ( Usti of earliest event reported)

s l sforc . or, in e.(Exact name ofrepistraut as specified in its cliarter )

Delaware 001-32224 94-3320693(mate or nfiier jurisdiction (Commission File Numbe r ) (IRS Eanpiayer

OF incrriora tin") (deniiacation No,)

The Landmark (r7 One Marke t, Suite 300 , San Francisco [ :'A 94105

(gJdred% o f prire(,.iilfjt exeeutive urf3cet, inciudirig xip m1e)

(415) 901-700 0

(f';egibltaort'% telephane nuintw.r, iirclu,tlo area cs)de)

Not Applicabl e

(rorwner n Arrne or fnrnficr address, if chuuged since last repor t

Item 7 . F nancial Stat[:f]aenlt*; and Exhibits

( ( ;] Exhibits ,

99,1 Press Release issued by salesforce,com, i rc, (fated August 19 , 200 4

Item 1.2 . Results of Operations and Financial Conditio n

Oo Aug uusi: 19, 2004, salcsIorce .com, inc, issued a press release announcing the results fo r its fiscal second quarter ended July 31., 2004 . .A copyof the pre ss release is attached as Exhibit 99,1 to this current report on Form 8-K and is incorporated by reference herein-

The inti7ri 7astion in this cw-rent report on Form 8 -K and the exhibits attached hereto shall not he deemed `" filed" for Purposes o Section 18 of

the Securities Exchang e A.ct of 1934, as amended (die "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be

deemed into porated by reference i n any filing ureter the Securities Act of 1933, as amendf d, or the Exchange Act, regardless of any genera l

w~ d14"'7g (~l 2 UE35, J~i'7f3F. .E2 C.)31 .1 .i,rif~,

incorporation language in such Ming-

SIGNATURE S

Pursuant to the, requirements of the Securities Exchange Act of 1 .934, the registrant has duly caused this report to be signed on its beh~alt' by theundersigned hereunto duly authorised.

Registrantsalesfaree .CQIH, inc .

fs/ STIiVE C'AKEBREADSteve Cakebread

C: hief 1 iruincial Officer

Date : August 1S), 2004

EXHIBIT INDEX

FOR)it Ni;. De5tr ¢ pt H

99 .'1 Press Release issued by salesforce-eom, i nc . datcd August 19, 2004

Exhibit 99 .1.

sa . c . mFOR IMMEDIATE RFLC:'.AS Contacts'

.Joelle Fitzgeraldsalesforce .com

Investor Relations415-536-6255 0

111tzgcrald (a>saleslorce .crrfl!Jane Hynes

sale4force .con aPublic Relations

415-901-5079y~~e, («~,smlcsfurc »corn

Salesforce . cozn Delivers Strong Fiscal Second Quarter Results , Raises Guidanc e

Revenue increases 88% .ter $40 .6 Million; Net Income Increases to $1 . 2 Millio n

1,300 Cuswrner :s and 21,000 Paying Subscribers Added in the Quarter

SAN FRANCISCO, Calif. ,, August 19, 2004 - Salesforec .com (NYS1 : CRM), tile rrifarket and technology leader in on demand c ;u.stome.r

rotation . hip maira ommt, today announced results .for its second fiscal quarter, ended July 31, 2004 .

"We are delighted to have delivered strong results during a difficult pe riod fb r the software industry ," said Marc Benioff, chairman and C13() of

sales;€orce .com. "Our rnlibers speak for the growing acceptance of the on demand computing .model . "

Strlesforcc,c~~rx~ delivered th following results For the second quarter of fiscal year 2005 :

Cl:) 2005 . SUGAR 0..I . :irlt,. .............................. .. .. .. ..... .. .... .... ... .. _. .....................................

Revenue = Total revenue was $40 .6 million, an increase of 88 percent compared to $21 .6 million for the same; period last year . Scibscriptionand support revcniw was $36 .0 million, an increase of 84 percent compared to $19 .6 trriliotM fox, the same period last year . Professional

service;, and other revenues were $4 .6 million, an increase of 125 percent compared to $2 .0 trillion for the same period last year.

Net income ; Net income was $1 .2 million, an increase of 859 percent compared to $122,000 110r the . sang: period last year . Earnings perdiluted share were $0 .01 compared to break even for t1he same Period last year .

Cash : Cast, from operations for the fiscal second quarter was $14 .9 million compared to $4,0 million for the same period last year, anincrease of 275 percent year over year . This cash increase is in addition to the $113 .8 million received as proceeds from the company's 11'D .

• Deferred revenue : Deferred revenue for the fiscal second quarter was $01 .6 million compared to $29 .4 million as c)ftlic cad of the secondquarter o!` fiscal year 2004, an increase of 109 percent year over year. This compares to deterred revenue of $52 .3 million as of the end oft heprevious quarter, or 18 percent growth sequentially.

+ Customers and paying subsc ribers ; During the. second quarter, the company added over 1,300 custom ers and approximately 21,000 paying

subscribers . As of the end of the second quarter, the company had approximately 11,100 customers and approximately 168,000 payingsubscribers .

efils xperiell e success.,-

Salesibrce .com is raising its guidance for- the fiscal year 2005, ending January 31, 2005, based on information as ofAugust 19, 2004 :

• Fiscal year 2005 revenue is expected to be in the range of $165 . 0 million to $17U.0 iriillion .

Fiscal year 2005 earnings per diluted share: are expected to be in the range of $0 .02 to $0-04 based on an estimated average of 110 milliondiluted shares and an effective tax rate of 13 percent .

Sale:sl:brcc .corn also expects revenue: for its third quarter of .iiscal year 2005 to he in the range of $13 .0 million to $45 .() million .

Quarterly Conference Call

Sales forcc .com will host a conference call to discuss second quarter results at 2 .00 p .m. Pacific Daylight Time today . A live audio webcast ofthe conference call, together with detailed financial information, can be accessed through the company's investor Relations Web site at

Earth ://www .salc.sforcc .corrr/investor. In addition, an archive of the webcast can be accessed through the same link until midnight on August 30,

2004, Participants who choose to call in to the conference call can (to so by dialing (800) 310-6649 or ( 7 19) 457-2693 . A replay will beavailable until midnight on August 23, 2004 and can be accessed by dialing (888) 203-1112 or (719) 457-0820, access code 305871 .

About salesforce .cnin

Salesforce .coin is the .market and technology leader in on demand customer relationship management (C RM). Through its award-w:inn.iagsalesforce .corn :family of products, the company provides a comprehensive suite of CRM services to help enterprises of all sire, in lustries andgeographies nwct the complex challenge of managing customer information . Salesforce .coni also offers sforce, the salesforce .comclient/service platform, to allow customers and independent software vendors to customize and integrate salesforce .com, as well as build their

own on de and enterprise applications. As of July 31, 2004, salesibrce .com manages customer information for approximately 11,100customers and approximately 168,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Automatic Data

Processing (AIR), Avis/Budget Runt A Car (Cerid .annt Rental Car Group), 1)ow Jones Newswires, Polycom and Sure` rust Banks .

Salesforce .com is headquartered in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under theticker symbol " CRM". For more information please visit http .//www.t alestirr'ce_corn or call 1-800-NO-SOF["W RE .

ltd 0() .`.'? 1 T';7::K7JC. On,l .,irtea . Inc .

I/ #

Sales fore e .coin is a registered trademark o .f salesforce .corn, inc ., San Francisco, California . Other names used may be traclc.narks of tircir

respective owners .

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995 ; This press .release contains forward-looking statementsabout expected revenue and earnings that involve risks, uncertainties and assumptions . If any such uncertainties niate ;rial .izc or if any of the

assumptions proves incorrect, our results could di .tfer materially from the results expressed or implied by the forward looking statements wemake.

The risks and urrcertai plies referred to above include - but are not limited to - risks associated with our .new business model, our history of

operating losses, possible fluctuations in our operating results and rate of growth, interruptions or delays in our Web hosting, breach of oursecurity measures, the immature market in which we operate, our relatively limited operating history, our ability to expand, retain and motivate

ow employees and manage our growth, Competition, new releases of our service and success .xl customer deployment and utilization and

selling to larger enterprise customers . Further i.n.I rnnation on these and other factors that could affect our financial results is included in our

registration statc.nient are Form S-1 fled with the SEC on June 22, 2004 and in other filings with the Securities and Exchange Commission .

These documents are available on the SI3C Filings section of die Investor Information section of our wehsite at www .snle.sfarce .cbnu/investor .

Sales force, com, inc . assumes no obligatim and does not intend to update these forward-looking state ments, except as required by law ,

salesforce . coni, inc.

Condensed Consolidated Statements of Operation s

(in thousands, except per share data)

(Unaudited )

Revenues :S ub ;cription arid supportProfessional services and other

Total. revenue sCost of rev .noes ( .1) :Subscription and support1'rc7 :tc :sic rr:~1 sc rvices and othe r

Total cost orreve uses

Gross profi tOperating expenses (1) :Research and developmentMarketing arid salesGeneral a nd administrative

:Total operating expensesfnn .ctm-e i'orrx operationsInnterest, netOther income

Income before provision for income taxes and minority interest

Provision fc}r income taxe s

Incom. ; hefrbrv minority interes tMinority i rterest in consolidated joint venture

Net income

C) 2005

Three Manrhs Ended Six Month, Vndfed

Jury 31, July 31 ,2044 2003 2(114 2803

3t3,017 $ 19,592 $ 67,133 $ 36,5144,564 2,031 8,287 4,022

40,581 21,623 75,420 40,536

2,699 1,819 4,981 3,4165,483 2,009 9,564 3,767

8,182 3,828 14,545 7,18332,399 17,795 60,875 33,353

2,074 1,685 4,201 2,92522,525 12,2()5 42,940 22,86 1

6,635 3,77 .1 12,208 7,41 6

31,234 17,661 59,349 33,2021,165 134 1,52€1 15 1

348 85 491 15 45 (70) 25 245

1,518 149 2,042 550202 22 272 1 1

1,316 127 1,7701 479(146) (5) (163) 1 1

$ 1,170 $ 122 $ 1,607 5 490

Basic net income Per share: $ 0-02 $ $ 0.0 3

Diluted .net income: per share $ 0 .01 $ - S 0,02

Shares used in computing basic net income per share 64,524 29,236 48,10 6

Shares used in computing diluted net income per share 1. 07,749 91,973 104,079

(1) Amounts include stock-based expenses, as follows :Coast of revenues $ 187 $ 153 n 357

Research and development 90 124 169Marketing, snail salts 408 521 822General and administrative 425 246 62 9

Total stock, based expenses $ 1,100 $ 1,044 S 1,977

salest'l,rce*,.rom, i n c

Condensed Consolidated Statements of Operations

As a percentage of total revenues :

(tInaudlited)

T 0 .02.5 0 .0 1

2.8,94891,755

5 31 3244

1,03553 6

$ 2,128

Tbrre MwiUi {~RUIe{1 .duly 31, Six Marktlrx :aced July 31,

1004 2003 24304 2003

Revenues .Subscription and support 89% 91 l% 89% 90`I

Professional services and other 11 1) 11 1 0

`.Total revenues 100 too 100 100

Cost of revennues :

Subsct iptiou alatl suppOrt 6 9 6 9

Professional services and other 14 10 13 9

total cost (A revenues 20 18 1.9 1 8

Gross pro fi t 80 82 81. 82

Operating expenses :Researc h and development 5 8 6 8Marketing and sale s 56 56 57 56

General and administr a tive 16 1 7 1 6 1 8

Total operating expenses 77 81 79 8 2Income from operations 3 1 2 0

Interest , not 1 0 1 0

Other income 0 0 0 1

Income before p rovision for income taxes and minority interest 4 1 3 1

Provision for income taxes (1) 0 0 ) (1

Income be arc minority interest 3 1 2 1

Minority interest in consolidated joint venture 0 11 Q 0

Net income 3% 19% 2% 1 . `%

Stock-based expenses as a percentage of total reve :n:nues, as follows:

Cost of revenue s 1 % 1111 I %

Research and development 0 1 D f 1

Marketing and sales 1 2 1 3

General and administrative I 1 1

CC,) 2003 . E1:)~:'r .R iMji ri(i, 1:n¢_ .

Total stock,-based expense s

s~iNesfor ,cone, inc.

Condensed Consolidated Balance Sheets

(in thousands)

Assets

Current assets :

Cash and cash equivalentsShort.-term niarkctabli; securitiesAccounts receivable

I)ei e red cornnnssioirs

Prepaid expenses and other current assets

Total 4urrCnnl assets

Marketable securities, 1non.1cur're°ntRQstrieted cas t

Fixed assets, ne tDeferred commissions, noncurrentOther assets

Total asset s

Liabilities, convertible preferred stock , and stockholders ' equity ( deficit)

Current liabilities :Accounts payable

Accrued expenses and other current liabilitiesincome taxes payableDeferred revenu eCurrent portion of capital lease obligations

Total current liabilitiesCapital lease obligations, net of current portionLog-term lease abandon :ut liability and otherminao'rity interes t

Total liabilitiesCojivert'ible preferred stockStockholders' equity (deficit) :Common stockAdditional paid-in capitalDeferred stock-based compensationNotes receivables from stockholdersAccumulated other comprehensive (loss) incomeAccumulated defici t

'total stockholders' equ ity (deficit)

'Total l.iabilit'ies, convertible pi'efened stock and stockholders ' equity (deficit )

salesforcc .com, inc .

3% 355 3%cr 5 0/

duly .{, JARURry 3 t ,20154

2004(unaudited) ( auQited)

$ 61,093 X 10,46355,057 25,34929,944 26,53 6

7,374 8,2663,500 3,53 2

156,968 74,14 656,477 .. ........

3,158 3,91 25,986 5,0692,127 2,8901.,797 1,494

226,51 3 $ 8 7,51 1

1,947 $ 2,03525,078 17,692540 534

61,557 49,677558 78

39,680 70,0(161,0041,689 1,83()953 775

93,'326 72,6116 1,13 7

103 3 2213,321. 35,580

(8,087) (8,25 :1 )(1,723) (1,674 )

(100) 1 0(70,327) (71,934 )

133,187 (46,237 )

226,513 $ 87,51 1

...... ............. .. ...-__

..............._.-.__ ................... .. ........ ..... ...... ........................ :....:..: .

Condensed Consolidated Statements of Cash Flows

(in thousands )

(Unaudited )

Operating activities :Net incomeAdjustments to reconcile net income to cash provided by operatingactivities ;Minority interestDepreciation and amortizationAmortization of de terrred commissions

Expeuses related to stock-based awardsChanges in assets and liabilitie s

Not cash provided by operating activities

Investing activities :Restricted cashChauScs in rnaiketahle securitiesCapital expenditures

Net cash used in investing activities

Financing activities :Proceeds from the .issuance of common stock, net o f issuance costs

Proceeds from the exercise of stock optionsPrincipal payments on capital lease obligationsRepurchase of urveste;d share sProceeds from subsidiary stock offerings

Net cash provided by (used in) financing activities

Effect of exchange rate change s

Net increase ( decrease) in cash and cash equivalents

Cash and cash equivalents , beginning of perio d

(;ash and casts equivalents, end of perio d

salesforce,com, We .

Additional Metric s

Customer and subscriber data :Approximate number of customer sApproximate number of paying subscriptions (1)Full Time Equivalent ti:cadcoun t

Financial data :Cash, cash equivalents and rnnrket thle securil .ic:s1)effrred revenue

'ri hre Mon ths JuuIed S ix Mouli, s E,ided

July 31, July .SI ,2004 2003 20164 200 3

1,170 $ 122 $ 1,607 $ 490

146 5 163 (11 )679 707 1,427 1,325

3,875 1,799 7,468 3,25 11,100 1,044 1,977 2,1287,965 309 8,952 1,564

14,935 3,986 21,594 8,747

760 (8) 754 (27 )(73,361) (2,256) (86,1 .5) (10,350 )

(484) (488) (762) (819 )

(73,085) (2,752) (86,193) (11,196 )

113,768 _ ..... 1.13,76892 114 1,734 17 5

(157) (159) (215) (310 )

(7) (11) (43) (16 )40 40 .... ......

1.13,736 (56) 11.5,294 (151 )

(53) 11 (55) 2 1

55,533 1,189 50,630 (2,579 )5,560 4,941 10,463 8,709

61,093 $ 6,130 $ 61,093 $ 6,13 0

July 31, April 30. Junw'ry 31, July 31 ,

20114 2004 2004 2003

11,100 9,800 8,700 7,0001+>8,t)t?f) 147,000 127,000 96,000

594 518 444 357

$ 172,627(2) $ 43,733 $ 35,912 $ 23,78061,557 52,340 $ 49,677 $ 29,449

?00 nnc;Ak? (:}z~3. :i,aat T,,c:: .......... .. ....... .... ..... . ... ......

'rhrca Months End, Six Marii1 : ltdcr3

3111y ;J 1, Judy 31 ,

2044 Z J 3 21X)4 Z(03

(unaudited) (NII 3k1l11vd )

Revenues by geography :Amlericas S 32,506 $ 17,909 $ 60,842 $ 33,95 5Europe 5,828 2,692 1.0,460 4,73 0Asia Pacific 2,247 1,022 4,118 1,85 1

40,581 $ 21,623 $ 75,420 $ 40,53 6

,Is a percoaia, re of total reven ues :

Revenues by geography :Americas 80% 83°/1 81% 840,

Europe 14 12 14 1 2

Asia Pacific 6 5 5 4

100% 100%. 100% 100 04+

(1) Paying subscriptions arc defined as unique user acc:owits, purchased by customers for use by their employees and other custonwr-

authorized users that have not been suspended for non-payment. and for which we are recognizing subscripti on revenue ,

The Iuly 11, 2004 paying, subscriber metrics coo net include the 20,000 subscriptions to a national prole :ssianal organization since these

subscriptions were priced at a nowinzai fee per subscription per rrlunth and provide limited rights to access and use certain Ieatli .res in the

(,'o.mp►rly's on-demand application service . The Company believes that excluding, the 20,000 subscriptions provides a more accurate

representation of its numbers .

Also, th July 31, 2004 number excludes approximately 2,000 paying subscribers who are using the Company's service, but for which theCompany has delayed revenue recognition witi :l specific new technology is completed.

(2) includes net proceeds r}1' SI 13,8 million friar the Company's sale of common stack, during its initial public offering in June 2004 ,

End of Filing

@) 2005 . EDGAR UY12 .3.in:,, Inc,'. ....... ... ........... .. . . . .... ................ ... ... .. ............... .... .