##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number: 001-33755
 SUCCESSFACTORS, INC.
  Delaware
    
    94-3398453(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1500 Fashion Island Blvd., Suite 300San Mateo, California
    
    94404(Address of principal executive offices)
    
    (Zip Code)
 (650) 645-2000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



SUCCESSFACTORS, INC.
 Table of Contents
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheets-March 31, 2009 (unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations-Three months ended March 31, 2009 and 2008 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows-Three months ended March 31, 2009 and 2008 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    33Signatures
    
    
    34EX-10.20EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SUCCESSFACTORS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Note 1)ASSETS:Current assets:Cash and cash equivalents
    
    $
    44,773
    
    
    $
    69,859Marketable securities
    
    
    60,726
    
    
    
    32,505Accounts receivable, net of allowance for doubtful accounts of $1,485 and $727
    
    
    35,427
    
    
    
    44,446Deferred commissions
    
    
    5,402
    
    
    
    5,721Prepaid expenses and other current assets
    
    
    3,334
    
    
    
    3,224Total current assets
    
    
    149,662
    
    
    
    155,755Restricted cash
    
    
    1,218
    
    
    
    1,248Property and equipment, net
    
    
    5,916
    
    
    
    6,933Deferred commissions, net of current portion
    
    
    5,737
    
    
    
    6,292Other assets
    
    
    379
    
    
    
    198Total assets
    
    $
    162,912
    
    
    $
    170,426LIABILITIES AND STOCKHOLDERS DEFICIT:Current liabilities:Accounts payable
    
    $
    2,912
    
    
    $
    1,960Accrued expenses and other current liabilities
    
    
    7,770
    
    
    
    9,632Accrued employee compensation
    
    
    10,418
    
    
    
    12,159Deferred revenue
    
    
    129,049
    
    
    
    128,940Current portion of capital lease obligations
    
    
    37
    
    
    
    37Total current liabilities
    
    
    150,186
    
    
    
    152,728Capital lease obligations, net of current portion
    
    
    10
    
    
    
    19Deferred revenue, net of current portion
    
    
    18,745
    
    
    
    20,858Other long-term liabilities
    
    
    1,594
    
    
    
    2,197Total liabilities
    
    
    170,535
    
    
    
    175,802Commitments and contingenciesStockholders deficit:Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 200,000 shares authorized 56,522 and 55,990 shares issued
and outstanding (excluding 245 and 337 legally issued and outstanding) as of March 31,
2009 and December 31, 2008, respectively
    
    
    57
    
    
    
    56Additional paid-in capital
    
    
    204,443
    
    
    
    200,907Accumulated other comprehensive loss
    
    
    (176
    )
    
    
    (74
    )Accumulated deficit
    
    
    (211,947
    )
    
    
    (206,265
    )Total stockholders deficit
    
    
    (7,623
    )
    
    
    (5,376
    )Total liabilities and stockholders deficit
    
    $
    162,912
    
    
    $
    170,426
  3




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##### Table of Contents



SUCCESSFACTORS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three Months EndedMarch 31,2009
    
    
    2008Revenue
    
    $
    35,220
    
    
    $
    23,461Cost of revenue (1)
    
    
    8,489
    
    
    
    9,336Gross profit
    
    
    26,731
    
    
    
    14,125Operating expenses: (1)Sales and marketing
    
    
    19,556
    
    
    
    21,609Research and development
    
    
    5,551
    
    
    
    5,209General and administrative
    
    
    7,244
    
    
    
    7,092Total operating expenses
    
    
    32,351
    
    
    
    33,910Loss from operations
    
    
    (5,620
    )
    
    
    (19,785
    )Interest income  and other, net
    
    
    132
    
    
    
    640Loss before provision for income taxes
    
    
    (5,488
    )
    
    
    (19,145
    )Provision for income taxes
    
    
    (194
    )
    
    
    (153
    )Net loss
    
    $
    (5,682
    )
    
    $
    (19,298
    )Net loss per common share, basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.37
    )Shares used in computing net loss per common share, basic and diluted
    
    
    56,315
    
    
    
    51,650
 
 (1)
    
    Amounts include stock-based compensation expenses as follows: Three Months EndedMarch 31,2009
    
    
    2008Cost of revenue
    
    $
    331
    
    
    $
    182Sales and marketing
    
    
    1,124
    
    
    
    785Research and development
    
    
    285
    
    
    
    215General and administrative
    
    
    674
    
    
    
    571Total
    
    $
    2,414
    
    
    $
    1,753
  4




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##### Table of Contents



SUCCESSFACTORS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Three Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (5,682
    )
    
    $
    (19,298
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,067
    
    
    
    723Amortization of deferred commissions
    
    
    1,776
    
    
    
    1,593Stock-based compensation expense
    
    
    2,414
    
    
    
    1,753Gain on retirement of fixed asset
    
    
    (64
    )
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    9,019
    
    
    
    11,450Deferred commissions
    
    
    (901
    )
    
    
    (1,207
    )Prepaid expenses and other current assets
    
    
    (111
    )
    
    
    (1,766
    )Other assets
    
    
    (181
    )
    
    
    27Accounts payable
    
    
    952
    
    
    
    (2,406
    )Accrued expenses and other current liabilities
    
    
    (1,837
    )
    
    
    1,384Accrued employee compensation
    
    
    (1,741
    )
    
    
    (7,949
    )Other liabilities
    
    
    (21
    )
    
    
    (64
    )Deferred revenue
    
    
    (2,003
    )
    
    
    11,766Net cash provided by (used in) operating activities
    
    
    2,687
    
    
    
    (3,994
    )Cash flows from investing activities:Restricted cash
    
    
    29
    
    
    
    39Capital expenditures
    
    
    (73
    )
    
    
    (88
    )Proceeds from sale of assets
    
    
    88
    
    
    
    Purchase of available-for-sale securities
    
    
    (55,674
    )
    
    
    (11,011
    )Proceeds from maturities of available-for-sale securities
    
    
    26,849
    
    
    
    2,000Proceeds from sales of available-for-sale securities
    
    
    546
    
    
    
    Net cash used in investing activities
    
    
    (28,235
    )
    
    
    (9,060
    )Cash flows from financing activities:Proceeds from exercise of stock options, net
    
    
    539
    
    
    
    166Proceeds from initial public offering, net of offering costs
    
    
    
    
    
    
    (545
    )Principal payments on capital lease obligations
    
    
    (9
    )
    
    
    (18
    )Net cash provided by (used in) financing activities
    
    
    530
    
    
    
    (397
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (68
    )
    
    
    48Net decrease in cash and cash equivalents
    
    
    (25,086
    )
    
    
    (13,403
    )Cash and cash equivalents at beginning of period
    
    
    69,859
    
    
    
    82,274Cash and cash equivalents at end of period
    
    $
    44,773
    
    
    $
    68,871Supplemental cash flow disclosure:Cash paid during the period for:Income taxes
    
    $
    112
    
    
    $
    
  5




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##### Table of Contents



SUCCESSFACTORS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Organization and Significant Accounting Policies
 Organization
  Basis of Presentation
   Principles of Consolidation
  Use of Estimates
  6




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Revenue Recognition
 Revenue Recognition, Application of AICPA Statement of Position 97-2 (SOP 97-2) to Arrangements That Include the Right
to Use Software Stored on Another Entitys Hardware, Revenue Arrangements
with Multiple Deliverables
 
    
    there is persuasive evidence of an arrangement;
    
    the subscription or services have been delivered to the customer;
    
    the collection of related fees is reasonably assured; and
    
    the amount of related fees is fixed or determinable.
   Deferred Revenue
  7




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Cost of Revenue
  Deferred Commissions
   Comprehensive Loss
  Income Taxes
  2. Recent Accounting Pronouncements
 Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly Fair Value Measurements
 Recognition and Presentation of
Other-Than-Temporary Impairments,
 Interim Disclosures about Fair Value of
Financial Instruments Disclosures about Fair
Value of Financial Instruments
 8




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##### Table of Contents



3. Cash, Cash Equivalents and Marketable Securities
  As of March 31, 2009Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueCash
    
    $
    3,311
    
    
    $
    
    
    
    $
    
    
    
    $
    3,311Cash equivalents:Money market funds
    
    
    41,461
    
    
    
    1
    
    
    
    
    
    
    
    41,462Total cash equivalents
    
    
    41,461
    
    
    
    1
    
    
    
    
    
    
    
    41,462Total cash and cash equivalents
    
    
    44,772
    
    
    
    1
    
    
    
    
    
    
    
    44,773Marketable securities:U.S. Treasury bills and bonds
    
    
    29,157
    
    
    
    13
    
    
    
    
    
    
    
    29,170U.S. government notes and bonds
    
    
    31,492
    
    
    
    23
    
    
    
    
    
    
    
    31,515Marketable equity securities
    
    
    50
    
    
    
    
    
    
    
    (9
    )
    
    
    41Total marketable securities
    
    
    60,699
    
    
    
    36
    
    
    
    (9
    )
    
    
    60,726Total cash, cash equivalents and marketable securities
    
    $
    105,471
    
    
    $
    37
    
    
    $
    (9
    )
    
    $
    105,499
   As of December 31, 2008Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueCash
    
    $
    684
    
    
    $
    
    
    
    $
    
    
    
    $
    684Cash equivalents:Money market funds
    
    
    69,175
    
    
    
    
    
    
    
    
    
    
    
    69,175Total cash equivalents
    
    
    69,175
    
    
    
    
    
    
    
    
    
    
    
    69,175Total cash and cash equivalents
    
    
    69,859
    
    
    
    
    
    
    
    
    
    
    
    69,859Marketable securities:U.S. Treasury bills and bonds
    
    
    8,969
    
    
    
    26
    
    
    
    
    
    
    
    8,995U.S. government notes and bonds
    
    
    22,858
    
    
    
    67
    
    
    
    
    
    
    
    22,925Corporate notes
    
    
    542
    
    
    
    
    
    
    
    (1
    )
    
    
    541Marketable equity securities
    
    
    50
    
    
    
    
    
    
    
    (6
    )
    
    
    44Total marketable securities
    
    
    32,419
    
    
    
    93
    
    
    
    (7
    )
    
    
    32,505Total cash, cash equivalents and marketable securities
    
    $
    102,278
    
    
    $
    93
    
    
    $
    (7
    )
    
    $
    102,364
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4. Accrued Expenses and Other Current Liabilities
  As of
    
    
    As ofMarch 31,
    
    
    December 31,2009
    
    
    2008(unaudited)Accrued royalties
    
    $
    454
    
    
    $
    1,039Accrued partner referral fees
    
    
    177
    
    
    
    209Accrued taxes payable
    
    
    1,372
    
    
    
    1,374Deferred rent
    
    
    229
    
    
    
    286Sales and use taxes
    
    
    1,934
    
    
    
    1,718Accrued other liabilities
    
    
    3,604
    
    
    
    5,006$
    7,770
    
    
    $
    9,632
  As of
    
    
    As ofMarch 31,
    
    
    December 31,2009
    
    
    2008(unaudited)Accrued bonuses payable
    
    $
    2,031
    
    
    $
    2,323Accrued commissions payable
    
    
    3,097
    
    
    
    4,919Accrued vacation
    
    
    3,305
    
    
    
    3,505All other accrued employee compensation payable
    
    
    1,985
    
    
    
    1,412$
    10,418
    
    
    $
    12,159
 5. Fair Value Measurements
 Fair Value Measurements
  Level 1:
    
    Quoted prices (unadjusted) in active markets that are accessible at the
measurement date for assets or liabilities. The fair value hierarchy gives the highest
priority to Level 1 inputs.Level 2:
    
    Observable prices that are based on inputs not quoted on active markets, but
corroborated by market data.Level 3:
    
    Unobservable inputs are used when little or no market data is available. The
fair value hierarchy gives the lowest priority to Level 3 inputs.
  10




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##### Table of Contents



Fair Value Measurements UsingQuoted Prices inAs of
    
    
    Active Market for
    
    
    Significant OtherMarch 31,
    
    
    Identical Assets
    
    
    Observable InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)Cash equivalents(1)
    
    $
    41,462
    
    
    $
    5,064
    
    
    $
    36,398Marketable securities(2)
    
    
    60,726
    
    
    
    29,211
    
    
    
    31,515Total
    
    $
    102,188
    
    
    $
    34,275
    
    
    $
    67,913
 
 (1)
    
    Cash and cash equivalents consist primarily of money market funds with original maturity dates of three months or less.(2)
    
    Marketable securities consists of U.S. government and agency securities and marketable equity securities.   6. Commitments and Contingencies
  7. Stock-Based Compensation
 Common Stock Options
 Share-Based Payment
  Shares Availablefor GrantBalance at December 31, 2008
    
    
    4,995Options granted
    
    
    (997
    )Restricted stock units granted
    
    
    (395
    )Options canceled/forfeited
    
    
    589Balance at March 31, 2009
    
    
    4,192
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##### Table of Contents



Three Months EndedMarch,2009
    
    2008(Unaudited)Expected life from grant date (in years)
    
    
    4.36
    
    
    
    3.95Risk-free interest rate
    
    
    1.72
    %
    
    
    2.44
    %Expected volatility
    
    
    67
    %
    
    
    50
    %Dividend yield
    
    
    
    
    
    
    Weighted-average estimated fair value of options granted during the period
    
    $
    2.82
    
    
    $
    3.54
  Weighted-Shares
    
    AverageSubject to
    
    ExerciseOptions
    
    PriceOutstanding
    
    per Share(Shares in thousands)Balance at December 31, 2008
    
    
    12,131
    
    
    $
    6.18Granted
    
    
    997
    
    
    
    5.26Exercised (1)
    
    
    (532
    )
    
    
    2.11Canceled/forfeited
    
    
    (589
    )
    
    
    8.74Balance at March 31, 2009
    
    
    12,007
    
    
    $
    7.20
 
 (1)
    
    Includes options vested during the period that were early exercised.   Weighted-AverageGrant-DateOutstanding
    
    Fair Value(Shares in thousands)Balance at December 31, 2008
    
    
    260
    
    
    $
    10.84Granted
    
    
    395
    
    
    
    5.25Vested
    
    
    
    
    
    
    Canceled/forfeited
    
    
    
    
    
    
    Balance at March 31, 2009
    
    
    655
    
    
    $
    7.47
  Stock Plans
  12




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8. Comprehensive Loss
  Three Months EndedMarch 31,2009
    
    
    2008Net loss
    
    $
    (5,682
    )
    
    $
    (19,298
    )Change in foreign currency translation gain (loss), net
    
    
    (68
    )
    
    
    48Change in unrealized gain (loss) on marketable securities, net
    
    
    (34
    )
    
    
    22Comprehensive loss
    
    $
    (5,784
    )
    
    $
    (19,228
    )
 9. Net Loss Per Common Share
   Three Months EndedMarch 31,(unaudited)2009
    
    
    2008Net loss
    
    $
    (5,682
    )
    
    $
    (19,298
    )Shares used in computing net loss per common share, basic and diluted
    
    
    56,315
    
    
    
    51,650Net loss per common share, basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.37
    )
  13




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10. Income Tax
  14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Overview
    Performance Management Goal Management
   15




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Critical Accounting Policies and Estimates
  Managements Discussion and Analysis of Financial Condition
and Results of Operations
 
    
    Revenue Recognition
    
    Accounting for Commission Payments
    
    Accounting for Stock-Based Awards
    
    Sales and Use Taxes
    
    Allowance for Doubtful Accounts
  16




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##### Table of Contents



Results of Operations
  Three Months Ended March 31,2009
    
    2008Revenue
    
    
    100
    %
    
    
    100
    %Cost of revenue
    
    
    24
    
    
    
    40Gross margin
    
    
    76
    
    
    
    60Operating expenses:Sales and marketing
    
    
    56
    
    
    
    92Research and development
    
    
    16
    
    
    
    22General and administrative
    
    
    21
    
    
    
    30Total operating expenses
    
    
    93
    
    
    
    144Loss from operations
    
    
    (17
    )
    
    
    (84
    )Interest income and other, net
    
    
    1
    
    
    
    3Loss before provision for income taxes
    
    
    (16
    )
    
    
    (81
    )Provision for income taxes
    
    
    
    
    
    
    (1
    )Net loss
    
    
    (16
    )%
    
    
    (82
    )%
  Revenue
 Three Months Ended March 31,2009
    
    2008
    
    Change(Dollars in thousands)(Unaudited)Revenue
    
    $
    35,220
    
    
    $
    23,461
    
    
    
    50
    %
   Cost of Revenue and Gross Margin
 Three Months Ended March 31,2009
    
    
    2008
    
    
    Change(Dollars in thousands)(Unaudited)Revenue
    
    $
    35,220
    
    
    $
    23,461
    
    
    
    50
    %Cost of revenue
    
    
    8,489
    
    
    
    9,336
    
    
    
    (9
    )%Gross profit
    
    $
    26,731
    
    
    $
    14,125
    
    
    
    89
    %Gross margin
    
    
    76
    %
    
    
    60
    %
  17




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##### Table of Contents



Operating Expenses
 Sales and Marketing
 Three Months Ended March 31,2009
    
    2008
    
    Change(Dollars in thousands)(Unaudited)Sales and marketing
    
    $
    19,556
    
    
    $
    21,609
    
    
    
    (9
    )%Percent of revenue
    
    
    56
    %
    
    
    92
    %
  Research and Development
 Three Months EndedMarch 31,2009
    
    2008
    
    Change(Dollars in thousands)(Unaudited)Research and development
    
    $
    5,551
    
    
    $
    5,209
    
    
    
    7
    %Percent of revenue
    
    
    16
    %
    
    
    22
    %
  General and Administrative
 Three Months EndedMarch 31,2009
    
    2008
    
    Change(Dollars in thousands)(Unaudited)General and administrative
    
    $
    7,244
    
    
    $
    7,092
    
    
    
    2
    %Percent of revenue
    
    
    21
    %
    
    
    30
    %
  Interest Income and Other, net
 Three Months EndedMarch 31,2009
    
    2008
    
    Change(Dollars in thousands)(Unaudited)Interest income and other, net
    
    $
    132
    
    
    $
    640
    
    
    
    (79
    )%Percent of revenue
    
    
    1
    %
    
    
    3
    %
 18




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Provision for Income Taxes
   Liquidity and Capital Resources
   Three Months EndedMarch 31,2009
    
    2008(Unaudited)Net cash provided by (used in) operating activities
    
    $
    2,687
    
    
    $
    (3,994
    )Net cash used in investing activities
    
    
    (28,235
    )
    
    
    (9,060
    )Net cash provided by (used in) financing activities
    
    
    530
    
    
    
    (397
    )
 Net Cash Provided By Operating Activities
   19




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##### Table of Contents



Net Cash Used in Investing Activities
  Net Cash Provided by Financing Activities
  Capital Resources
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Sensitivity
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Fair Value of Financial Instruments
  
 ITEM 4. CONTROLS AND PROCEDURES
 (a) Disclosure Controls and Procedures
  (b) Changes in Internal Control Over Financial Reporting
  
 PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
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Item 1A. Risk Factors
 A restated description of the risk factors associated with our business is set forth below.
This description includes any material changes to and supersedes the description of the risk
factors included in our Annual Report on Form 10-K for the year ended December 31, 2008. The risks
and uncertainties described below are not the only ones facing us. Other events that we do not
currently anticipate or that we currently deem immaterial also may affect our results of operations
and financial condition.
 We have a history of losses and we may not achieve or sustain profitability in the future.
  Current uncertainty in global economic conditions makes it particularly difficult to predict
demand and other related matters and makes it more likely that our actual results could differ
materially from expectations.
  Because we recognize revenue from our customers over the term of their agreements, downturns
or upturns in sales may not be immediately reflected in our operating results.
  Because we recognize revenue from our customers over the term of their agreements but incur
most costs associated with generating customer agreements upfront, rapid growth in our customer
base will result in increased losses.
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Our business depends substantially on customers renewing their agreements and purchasing
additional modules or users from us. Any decline in our customer renewals would harm our future
operating results.
  If our security measures are breached or unauthorized access to customer data is otherwise
obtained, our application suite may be perceived as not being secure, customers may curtail or stop
using our application suite, and we may incur significant liabilities.
  Because our application suite collects, stores and reports personal information of job
applicants and employees, privacy concerns could result in liability to us or inhibit sales of our
application suite.
   We have experienced rapid changes in our organization in recent periods. If we fail to
manage these changes effectively, we may be unable to execute our business plan, maintain high
levels of service or adequately address competitive challenges.
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Failure to adequately expand and ramp our direct sales force and develop and expand our
indirect sales channel will impede our growth.
  The market for our application suite depends on widespread adoption of strategic HR
software.
  We have derived a substantial portion of our subscription revenue from sales of our
performance management and goal management modules. If these modules are not widely accepted by new
customers, our operating results will be harmed.
 Performance
Management Goal Management
 The market for on-demand applications is at an early stage of development, and if it does
not develop or develops more slowly than we expect, our business will be harmed.
  
    
    perceived security capabilities and reliability;
    
    perceived concerns about ability to scale operations for large enterprise customers;
    
    concerns with entrusting a third party to store and manage critical employee data; and
    
    the level of configurability of on-demand applications.
  The market in which we participate is intensely competitive, and if we do not compete
effectively, our operating results could be harmed.
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Our quarterly results can fluctuate and, if we fail to meet the expectations of analysts or
investors, our stock price and the value of your investment could decline substantially.
  
    
    our ability to attract new customers;
    
    customer renewal rates;
    
    the extent to which customers increase or decrease the number of modules or users upon
any renewal of their agreements;
    
    the effects of changes in global economic conditions and announcements of economic data
and government initiatives to address the global economic downturn;
    
    the level of new customers as compared to renewal customers in a particular period;
    
    the addition or loss of large customers, including through acquisitions or
consolidations;
    
    the mix of customers between small, mid-sized and enterprise customers;
    
    changes in our pricing policies or those of our competitors;
    
    seasonal variations in the demand for our application suite, which has historically been
highest in the fourth quarter of a year;
    
    the amount and timing of operating expenses, particularly sales and marketing, related to
the maintenance and expansion of our business, operations and infrastructure;
    
    the timing and success of new product and service introductions by us or our competitors
or any other change in the competitive dynamics of our industry, including consolidation
among competitors, customers or strategic partners;
    
    network outages or security breaches;
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
    
    the timing of expenses related to the development or acquisition of technologies or
businesses and potential future charges for impairment of goodwill from acquired
companies; and
    
    other general economic, industry and market conditions.
  The market for our application suite among large customers may be limited if they require
customized features or functions that we do not intend to provide.
  We depend on our management team, particularly our Chief Executive Officer and our
development personnel, and the loss of one or more key employees or groups could harm our business
and prevent us from implementing our business plan in a timely manner.
   If we cannot maintain our corporate culture as we grow, we could lose the innovation,
teamwork, passion and focus on execution that we believe contribute to our success, and our
business may be harmed.
  Our growth depends in part on the success of our strategic relationships with third parties.
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We rely on a small number of third-party service providers to host and deliver our
application suite, and any interruptions or delays in services from these third parties could
impair the delivery of our application suite and harm our business.
    If our application suite becomes unavailable or otherwise fails to perform properly, our
reputation will be harmed, our market share would decline and we could be subject to liability
claims.
  
    
    lost or delayed market acceptance and sales;
    
    breach of warranty claims;
    
    sales credits or refunds to our customers;
    
    loss of customers;
    
    diversion of development and customer service resources; and
    
    injury to our reputation.
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We rely on third-party computer hardware and software that may be difficult to replace or
which could cause errors or failures of our service.
  If we are not able to develop enhancements and new features that achieve market acceptance
or that keep pace with technological developments, our business will be harmed.
   If we fail to develop widespread brand awareness cost-effectively, our business may suffer.
  Because our long-term success depends, in part, on our ability to expand the sales of our
application suite to customers located outside of the United States, our business will be
susceptible to risks associated with international operations.
  
    
    our ability to comply with differing technical and certification requirements outside the
United States;
    
    difficulties and costs associated with staffing and managing foreign operations;
    
    greater difficulty collecting accounts receivable and longer payment cycles;
    
    unexpected changes in regulatory requirements;
    
    the need to adapt our application suite for specific countries;
    
    difficulties in understanding and complying with local laws, regulations and customs in
foreign jurisdictions;
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
    
    tariffs, export controls and other non-tariff barriers such as quotas and local content
rules;
    
    more limited protection for intellectual property rights in some countries;
    
    adverse tax consequences;
    
    fluctuations in currency exchange rates;
    
    restrictions on the transfer of funds; and
    
    new and different sources of competition.
  Because competition for our target employees is intense, we may not be able to attract and
retain the quality employees we need to support our planned growth.
  Any failure to protect our intellectual property rights could impair our ability to protect
our proprietary technology and our brand.
   We may be sued by third parties for alleged infringement of their proprietary rights.
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Our use of open source and third-party technology could impose limitations on our ability to
commercialize our application suite.
 We use open source software in our application suite.
 Changes in laws and/or regulations related to the Internet or changes in the Internet
infrastructure itself may cause our business to suffer.
   We may acquire other companies or technologies, which could divert our managements
attention, result in additional dilution to our stockholders and otherwise disrupt our operations
and harm our operating results.
   
    
    unanticipated costs or liabilities associated with the acquisition;
    
    incurrence of acquisition-related costs, which would be recognized as expense under
Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007) (SFAS 141R),
Business Combinations.
    
    diversion of managements attention from other business concerns;
    
    harm to our existing business relationships with business partners and customers as a
result of the acquisition;
    
    the potential loss of key employees;
    
    use of resources that are needed in other parts of our business; and
    
    use of substantial portions of our available cash to consummate the acquisition.
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Our business is subject to changing regulations regarding corporate governance and public
disclosure that will increase both our costs and the risk of noncompliance.
  Changes in financial accounting standards or practices may cause adverse, unexpected
financial reporting fluctuations and affect our reported results of operations.
  If there are substantial sales of shares of our common stock, the price of our common stock
could decline.
  If securities or industry analysts do not publish research or publish inaccurate or
unfavorable research about our business, our stock price and trading volume could decline.
  Our directors, executive officers and principal stockholders have substantial influence over
us and could delay or prevent a change in corporate control.
  
    
    delaying, deferring or preventing a change in our control;
    
    impeding a merger, consolidation, takeover or other business combination involving us; or
    
    discouraging a potential acquirer from making a tender offer or otherwise attempting to
obtain control of us.
  Delaware law and provisions in our restated certificate of incorporation and restated bylaws
could make a merger, tender offer or proxy contest difficult, which could depress the trading price
of our common stock.
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
    
    our Board of Directors is classified into three classes of directors with staggered
three-year terms;
    
    only our Chairperson of the Board of Directors, our Chief Executive Officer, our
President or a majority of our Board of Directors are authorized to call a special meeting
of stockholders;
    
    our stockholders can only take action at a meeting of stockholders and not by written
consent;
    
    vacancies on our Board of Directors can be filled only by our Board of Directors and not
by our stockholders;
    
    our restated certificate of incorporation authorizes undesignated preferred stock, the
terms of which may be established and shares of which may be issued without stockholder
approval; and
    
    advance notice procedures apply for stockholders to nominate candidates for election as
directors or to bring matters before an annual meeting of stockholders.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
 None
 
 Item 4. Submission of Matters to a Vote of Security Holders
 None
 
 Item 5. Other Information
 None
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Item 6. Exhibits
 EXHIBIT INDEX
 Exhibit No.
    
    Document10.20
    
    2009 Corporate Bonus Plan31.1
    
    Certification of Chief Executive Officer pursuant to Exchange
Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Exchange
Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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SIGNATURES
  SuccessFactors, Inc.By:
    /s/ Bruce FeltBruce FeltChief Financial Officer
(Principal Financial and Accounting Officer) 
Date: May 8, 2009 34




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EXHIBIT INDEX
 Exhibit No.
    
    Document10.20
    
    2009 Corporate Bonus Plan31.1
    
    Certification of Chief Executive Officer pursuant to Exchange
Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Exchange
Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 35